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2016-11-17 Finance Committee Open Session AgendaCity of Saint John Finance Committee - Open Session AGENDA Thursday, November 17, 2016 4:30 pm 8th Floor Boardroom, City Hall 1. Call to Order Pages 1.1 Approval of Minutes of November 8, 2016 1 - 4 1.2 Service Audit Plan presented by Deloitte 5-29 1.3 2nd Draft General Operating Budget to Finance Committee (Recommend the 30-52 2nd Draft Budget to Council for Information on November 28th) 1.4 Grant Request 1.4.1 Saint John Community Arts Board 53-55 1.4.2 Ellipsis Productions (Alice's Adventures in Wonderland) 56-59 1.5 Capital Budget 60-76 1.6 PILT (No Report) 1 Poeta Sy:1 rIN. m MINUTES - OPEN SESSION FINANCE COMMITTEE MEETING NOVEMBER 8, 2016 AT 4:30 PM Stn FLOOR BOARDROOM, CITY HALL Present: Mayor D. Darling Councillor D. Merrithew Councillor D. Reardon Councillor G. Sullivan Absent: Councillor G. Norton Councillor S. Casey Also Present: City Manager J. Trail Deputy City Manager N. Jacobsen Commissioner of Finance and Treasurer K. Fudge Comptroller C. Graham Senior Manager Financial Planning H. Nguyen Commissioner of Transportation & Environment Services M. Hugenholtz Commissioner Saint John Water B. McGovern Commissioner Growth and Community Development J. Hamilton Fire Chief K. Clifford Assistant Comptroller Finance C. Lavigne Administrative Assistant K. Tibbits 1. Meetiniz Called To Order Councillor Merrithew called the Finance Committee open session meeting to order. 1.1 Approval of Agenda Moved by Councillor Reardon, seconded by Mayor Darling: RESOLVED that the agenda for the open session meeting of the Finance Committee be approved. MOTION CARRIED. 1.2 Approval of Minutes 1.2.1 Minutes of October 6, 2016 Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the minutes of October 6, 2016 be approved. MOTION CARRIED. RESOLVED that the minutes of October 13, 2016 be approved. 1.3 General Capital Budget: Recommend Draft General Capital Budget to Council on November 14th Mr. Fudge reviewed the submitted presentation and commented on the 2017 budget process. The draft capital budget is aligned with Council's priorities - growth and prosperity, creation of a safe city, value service delivery, and fiscal responsibility. Mr. Fudge asked for feedback with respect to the draft general capital budget. Referring to the operating budget, Mr. Fudge stated that adjustments will be required once the numbers from the province are received as to how the differences will be applied to the budget. Mr. Fudge noted that the committee has recommended that a portion of any revenue increase be applied towards the capital budget. Responding to a comment regarding reserves, Mr. Fudge explained that if Council allocates for a reserve, there needs to be a corresponding offset/reduction in the operating budget to achieve that outcome. Mr. Trail commented that the draft budget is conservative and that he expects limited revenue growth which would be layered into the budget. Council's priorities are intended to cover the four year mandate and are not necessarily initiatives to be undertaken in 2017. Discussion ensued with respect to the contingency items in the capital budget. Council will also be receiving a presentation from the Fundy Region Services Commission and it is expected that the City will embark on an Arenas Plan study to better understand future anticipated investment to aging arena infrastructure. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee approve the 2017 General Fund Capital Budget and submit to Council for information at the meeting of November 14th and upon completion of Council's review be recommended for approval at the November 28th meeting. MOTION CARRIED. 1.3.1 Cedar Point Capital Improvements Mr. Fudge commented on the referral from Council to consider adding funding for capital improvements to Cedar Point in the 2017 capital budget. The committee discussed the concerns from the residents and the proposed solutions. Staff suggested that investment begin in 2019 as part of the regular infrastructure renewal. The proposal would reinstate the existing standard and introduce other measures around traffic calming and pedestrian safety, and be done in a way that respects the input received from the community. There are maintenance issues that will be addressed in the normal course of business, probably before 2019. The committee suggested a communications strategy be developed in order to convey information to the residents of Cedar Point in terms of what can be done. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee recommend to Common Council that improvements for the Cedar Point Capital project be referred to the 2019 capital budget; and further that staff provide a written report to Common Council on November 28th, 2016. LTA [0000114L1ilk]ilk] Iif91 1.4 General Operating Budget Mr. Fudge explained that in 2014 Council approved a Community Grants policy and established a municipal grants program to support community organizations. At that time, Council also appointed a committee to review and provide recommendations to Council on applications received through the program. Moved by Mayor Darling, seconded by Councillor Reardon: RESOLVED that the Finance Committee recommend to Council to re -appoint a Community Grants Committee to review grant applications and make recommendations to Council regarding the allocation of the grant funding envelope. MOTION CARRIED with Councillor Sullivan voting nay. 1.4.2 Seek Finance Committee's Input regarding Changes to the Budget based on Council's Priorities Mr. Fudge suggested that the committee review the submitted document and provide feedback on any suggested adjustments to the operating budget. A complete discussion will occur at the November 17th meeting. Moved by Mayor Darling, seconded by Councillor Reardon: RESOLVED that the General Operating Budget be received for information. MOTION CARRIED. 1.4.3 Additional Funding to Police for Vehicles (Deputy Chief G. McCloskey entered the meeting) In the September 15th draft budget, staff recommended an increase to the police funding envelope by approximately $550,000 to allow for inflationary and salary increases. The budget submitted by the police commission essentially aligned with staff's recommendation with the exception of a $100,000 increase, mostly to do with the funding of vehicles. Deputy Chief McCloskey indicated that the police department is prepared to agree to staff's recommendation, adding the concern is that the funding for police vehicles continues to be deferred. Moved by Mayor Darling, seconded by Councillor Reardon: RESOLVED that the Finance Committee recommends that the Police budget remains unchanged at $24,769,759 or 2.3% increase over 2016, and that the Police Commission resubmits their detailed budget to match their funding envelope. MOTION CARRIED. (Deputy Chief G. McCloskey withdrew from the meeting) 1.4.4 Amazeatorium Partnership Proposal Mr. Fudge stated that the Amazeatorium has requested $10,000 in support for an event at Harbour Station in April 2017. In lieu of a $10,000 sponsorship, staff recommended several alternatives that the City could do to support the Amazeatorium event. Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the Finance Committee recommends that the Citv of Saint John will offer its programs; P.R.O. Kids and the Playground program; 2. Purchase 1 quarter page ad in the Amazeatorium program to promote the availability of its P.R.O. Kids program to underprivileged city residents; 3. Highlight the attendance of P.R.O. Kids & the Playground program at the Amazeatorium through its social media pages; and, 4. Purchase at least 40 tickets to the Amazeatorium which will be distributed to children living in priority neighbourhoods that would otherwise be unable to afford to attend. MOTION CARRIED. 1.5 Aging AR Update Ms. Graham reviewed the submitted report with the committee. The Billing and Collections department has been diligent in reducing the receivables amount and continue to work with customers who are in arrears. Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the report entitled, Water and Sewerage Accounts Receivables — October 2016, be received for information. MOTION CARRIED. Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that the Finance Committee recommends Common Council rescind the resolution of July 20, 2015 regarding the Finance Committee to provide updates to Water and Sewerage Accounts Receivable to Council on a quarterly basis. MOTION CARRIED. Adjournment Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee open session meeting held on Tuesday, November 8, 2016 be adjourned. MOTION CARRIED. The Finance Committee meeting held on November 8, 2016 was adjourned at 7:10 p.m. Deloitte Private G etflu iu iu,u„,i� g y o �u.i U,-,ie iii, e 2016 Audit service plan The City of Saint John For the year ended December 31, 2016 Presented to the Finance Committee of the City of Saint John November 17, 2016 DeloitteO.M., P u r ?k 4 t p w , � r ! M Deloitte Private November 15, 2016 To the Chair and members of the Finance Committee of The City of Saint John P.O. Box 1971 Saint John, NB E2L 41_1 Dear the Committee Members 2016 Audit service plan We are pleased to provide you with our audit service plan for the City of Saint John ("the City") for the year ending December 31, 2016. This document describes the key features of our plan including our audit scope and approach, our planned communications with you, our team and an estimate of our fees. Our commitment to you is straightforward: we will provide you with outstanding professional services delivered by an experienced and dedicated team of specialists. Our professionals will continue providing you with best practices and insights to face the increasingly complex array of issues and challenges encountered by entities like the City. At Deloitte, we are committed to helping the City grow and successfully achieve its business objectives in today's ever-changing economy. We look forward to discussing our audit service plan with you and answering any questions you may have. Yours truly, e,- Deloitte LLP Chartered Professional Accountants Geoffrey Cochrane, CPA, CA Partner C.1 Our audit explained Audit scope and terms of engagement We have been asked to perform an audit of the City's c:mnsolidated flnanc:;iall statements (the °fnan(:;iall statements") in accordance with Canadian public:; set:Aor at:xmunting standards (" PSAS") as at and for the year ending Det:;ember 31, 2016.Our audit will be t:mndut:Aed in accordance with Canadian generally accepted auditing standards ("C anadian GAA S"). i he terms and conditions of our engagement, including our responsibilities for any additional audit related services you have asked us to provide, are described in the engagement letter ( master service agreement, which is included in Appendix 5. Our master servuoe agreement should Ibe sinned by the Commissioner of I::unance and Administration Services on (behalf of the Nuance committee of the Canty of Saint John. `,& 9;e iiialIli9:y We are responsible for providing reasonable assuranc:;e that your fnanc:;iall statements as a whole are free from material misstatement. Materiality levels are determined on the basis of total revenues. Our preliminary estimate of materiality for the year ending Dee:;ember 31, 2016 has been set at $6,500,000 (2015 -`.65,7501,010101). We will inform the board of direc:Aors of all unc:mrrec:Aed misstatements greater than a e:;learly trivial amount of 5% of materiality or `.6325,000 (2015 -`.6267,50101) and any misstatements that are, in ourjudgment, qualitatively material. In ac:xmrdarx:e with Canadian GAAS, we will ask that any misstatements be c:mrrec:Aed. liiginliifliicaint udlt risks Through our preliminary risk assessment proe:;ess, we have identified the signifk:;ant audit risks. These risks of material misstatement and related audit responses are diisc:wssed in the Signifk:;ant audit risks see:Aion of this report. © Deloitte LLP and affiliated entities. 7 The City of Saint John. — 2016 Audit Service Plan Fraud risk We will develop our audit strategy to address the assessed risks of material misstatement due to 'fraud. Determining this strategy will involve: 1. Asking people involved in the fnanc;iall reporting process about inappropriate or unusuall activity. 2. Testing a sample ofjournall entries throughout the period as well as adjustments made at the end of the reporting period. 3. Identifying and obtaining an understanding of the business rationale for significant or unusual transactions that are outside the normall course of business. 4. Evaluating whether your accounting policies may be indicative of fraudulent financial reporting resulting from management's effort to manage earnings. 6. Evaluating whether the judgements and decisions related to management estimates indicate a possible bias. 6. Incorporating an element of unpredictability in selecting our audit procedures. We will also ask the board of directors for their views about the risk of fraud, whether they (know of any actuall or suspected fraud affecting the City and their role in the oversight of management's antifraud programs. If we suspect fraud involving management, we will immediately inform the board of directors of our suspicions and discuss the nature, timing, and extent of audit procedures necessary to complete the audit. oircijpie'te elrrrgargeWiieint Irelpolrfi'ing Under Canadian GAAS, we are required to communicate certain matters to the board of directors. The primary reports and formal communications through which we will address these matters are: This Audit Service Flan Year End Comm unicatio n, and Our Auditor's Report can the fnanciall statements. We will provide you with insights into the condition of your business and offer meanCingfull suggestions for improvement. Au6if fees We propose fees of `666,900 (2016 - $63,140) for the audit of the City of Saint John consolidated financ;iall statements which includes the audit and disclosures relating to the accounting of the shared risk pension plan for the City of Saint John. Fees for the City of Saint John _ Frust Funds will be set at `.61,620 (2016 -`61,69(1). All of fee assumptions are outlined in the engagement letter. Fees for Parking Commission, Harbour Station Commission and Saint John Trade and Convention Center will be communicated in separate engagements letters to the specific; entities. © Deloitte LLP and affiliated entities. 8 The City of Saint John. — 2016 Audit Service Plan 2 Significant audit risks During our risk assessment, we identified some significant audit risks that will require special audit consideration. These risks, together with our planned responses, are described below. The following tables set out the significant audit risks that we identified during our preliminary planning activities, including our proposed response to each risk. Our planned audit response is based on our assessment of the likelihood of a risk's occurrence, the significance should a misstatement occur, our determination of materiality and our prior knowledge of the City. Management override of controls Complex and non- routine consolidation entries for controlled entities Conversion to CityWide for recording and accounting of tangible capital assets Will be addressed during the audit Not applicable © Deloitte LLP and affiliated entities. 9 The City of Saint John. — 2016 Audit Service Plan 3 Mainag urnein oveirihde of cointirds1 Description: Management is in a unique position to override internal controls, which could allow manipulation of the accounting records that could result in financial statements that are materially misstated. This represents a fraud risk for the 2016 audit Financial statement impact: Financial statements as a whole. • We will discuss fraud with management. • We will test the appropriateness of journal entries recorded in the general ledger and other adjustments made in the preparation of the financial statements. • We will evaluate the business rationale for any significant unusual transactions. • We will determine whether the judgments and decisions related to management estimates indicate a possible bias, which will include performing retrospective analysis of significant accounting estimates. Coirnp111ex aindun o inl rou,fline coinsdHdafloin eintihies °fu er cointirdled ein'fl,fles Description: Accounting for controlled entities is a requirement of PSAS and there is a risk that the completeness of the consolidation is not performed correctly and that disclosures are incomplete. Financial statement impact: Financial statements as a whole. • We will test the design and implementation of controls specific to this risk. • The City of Saint John is considered a Group Audit under Canadian Auditing Standards due to the existence of controlled entities. As the Group Auditor, we will gain an understanding of the complexity and nature of the operations of controlled entities audited by other accounting firms and will obtain the audited financial statements to ensure the City's disclosures are complete and accurate. • We will review management's determination of controlled entities and method of consolidation under PSAS. • Testing of the complex and non -routine consolidation entries, including elimination entries, will be performed and reviewed by senior members of the engagement team who have experience auditing consolidations. Coinveirslbinto QlyWde "four recoirdhing aurid a uru in'di ural g oftaingldWe caplld1 assets Description: There is the risk that during the transition from the use of excel to CityWide the tangible capital assets recorded do not match those which have been audited in previous years. Financial statement impact: Completeness for tangible capital assets and depreciation expense. • We will test the design and implementation of controls specific to this risk. • We will test additions of tangible capital assets to CityWide by agreeing to opening audited balances and ensure continuity of opening balances in CityWide agree to closing numbers previously used to calculate the total tangible capital assets. • We will also perform a recalculation of depreciation expense and validate that depreciation has commenced when the asset is available for use. As we ur a rurn a u� ur audl uru a u� ur , w w li you of aura lii g inl l' l coin Thain g a Ilan .. IIS . ur .. aur sliiginlii'flcaint ihisks dl ussed aboveurmu Ilane reasoins fu er Ihchainges © Deloitte LLP and affiliated entities. 10 The City of Saint John. — 2016 Audit Service Plan Group audit The audit of the City is considered to be a group audit, in which portions of the audit, are conducted by another auditor. Because of this, we are also required to determine the scope of work required for each component. The table below lists the independent public accounting firms (i.e., other auditors) that will perform audit procedures in the current period audit: The City of Saint John General Operating Fund Significant Deloitte (includes Saint John Police Commission) The City of Saint John Capital and Loan Fund Significant Deloitte The City of Saint John Water and Sewerage Significant Deloitte Utility Operating Fund The City of Saint John Water and Sewerage Significant Deloitte Capital and Loan Fund Saint John Parking Commission Significant Deloitte Harbour Station Commission Significant Deloitte Saint John Transit Commission Significant Teed Saunders Doyle Saint John Non Profit Housing Inc. Significant Teed Saunders Doyle Saint John Development Corporation Significant Ernst & Young Power Commission of Saint John Significant KPMG Saint John Trade and Convention Centre Non — Significant Deloitte Saint John Industrial Parks Inc. Non — Significant Teed Sounders Doyle Lord Beaverbrook Rink Non — Significant Frank Ashe Saint John Aquatic Centre Commission Non — Significant Cumming & Associates Saint John Jeux Canada Games Foundation Non — Significant Teed Saunders Doyle Inc. Saint John Free Public Library Non — Significant Ernst & Young ouruur000 of audl evideince liiurm o giroup ouu l Based on our analysis, we have determined the scope of work needed to provide an appropriate basis for our audit opinion on the financial statements. The components above that have been identified as significant will have a full scope financial statement audit performed and in instances where Deloitte is not the auditor of the component, an audit will be performed by other auditors and comprehensive referral instructions will be sent by Deloitte. Note that audits done on components deemed to be significant will be performed using a materiality figure that is lower than the City's materiality communicated above. For those components that have been identified as non-significant, analytical review procedures will be performed. © Deloitte LLP and affiliated entities. 11 The City of Saint John. — 2016 Audit Service Plan 5 Appendix 1 — Audit approach Deloitte's audit approach is a systematic methodology that enables us to tailor our audit scope and plan to address the unique issues facing the City. The following steps are not necessarily sequential nor are they mutually exclusive. For example, once we have developed our audit plan and the audit is being performed, we may become aware of a risk that was not identified during the planning phase. Based on that new information, we would reassess our planning activities and adjust the audit plan accordingly. 'I III in lii ilii a III VIII a in in Iii in 2 The Deloitte audit approach begins with an extensive planning process that includes: • Assessing your current business and operating conditions • Understanding the composition and structure of your business and organization • Understanding your accounting processes and internal controls • Understanding your information technology systems • Identifying potential engagement risks • Planning the scope and timing of internal control and substantive testing that take into account the specific identified engagement risks iii un2 aurid rospoindhingto eingagernein'tilii 111 Our Audit approach combines an ongoing identification of risks with the flexibility to adjust our approach when additional risks are identified. Since these risks may impact our audit objectives, we consider materiality in our planning to focus on those risks that could be significant to your financial reporting. ��ir l ir��{��u«.fir Niru of fl -1e of firau.rd When we identify a misstatement or control deficiency, we consider whether it may be indicative of fraud and what the implications of fraud and significant error are in relation to other aspects of the audit, particularly the reliability of management representations. In determining our audit strategy to address the assessed risks of material misstatement due to fraud, we will: • Assign and supervise personnel, taking into account the knowledge, skill and ability of individuals with significant engagement responsibilities and our assessment of the risks of material misstatement due to fraud for the engagement. • Evaluate whether the City's selection and application of accounting policies, particularly those related to subjective measurements and complex transactions, may be indicative of fraudulent financial reporting resulting from management's effort to manage earnings. • Incorporate an element of unpredictability when selecting the nature, timing and extent of our audit procedures. © Deloitte LLP and affiliated entities. The City of Saint John. — 2016 Audit Service Plan 6 12 We will inquire directly to the financial committee regarding: • Its views about the risk of fraud, • Whether it has knowledge of any actual or suspected fraud affecting the City, and • The role it exercises in the oversight of fraud risk assessment and the establishment of mitigating controls. We will also inquire if the financial committee is aware of tips or complaints regarding the City's financial reporting and, if so, the financial committee's responses to such tips and complaints and whether it is aware of matters relevant to the audit, including, but not limited to, violations or possible violations of laws or regulations. If we suspect fraud involving management, we will communicate these suspicions to the financial committee and discuss the nature, timing, and extent of audit procedures necessary to complete the audit. An important part of our audit planning process involves gaining an understanding of: 1. The importance of the computer environment relative to the risks to financial reporting 2. The way in which that environment supports the control procedures we intend to rely on when conducting our audit, and 3. The computer-based information that supports our substantive procedures. The objective of our review of computer controls is to identify potential areas of risk and assess the relevance, reliability, accuracy and completeness of the data produced by the systems. We also assess the operating effectiveness of the computer environment and determine the reliability of the financial information used to generate the financial statements. To accomplish this, we gain an up-to-date understanding of your organization's computer processing environment and our understanding of the relevant general computer controls. III': Ill o 11 lii ur �aind executhing the audlIl ll4in The performance of an audit includes evaluating the design and determining the implementation of internal controls relevant to the audit, testing the operational effectiveness of the controls we intend to rely on, and performing substantive audit procedures. A u.cdt t Ip iroce d a cr ire e;, The timing of our audit procedures is dependent upon a number of factors including the need to coordinate with management for the provision of supporting analysis and other documentation. Generally, we perform our audit procedures to allow us sufficient time to identify significant issues early, thereby allowing more time for analysis and resolution. Tests of c�)irfllro�k�,; As part of our audit, we will review and evaluate certain aspects of the systems of internal control over financial reporting to the extent we consider necessary in accordance with Canadian GARS. The main objective of our review is to enable us to determine the nature, extent and timing of our audit tests and establish the degree of reliance that we can place on selected controls. An audit of the financial statements is not designed to determine whether internal controls were adequate for management's purposes or to provide assurance on the design or operational effectiveness of internal control over financial reporting. The extent to which deficiencies in internal control may be identified through an audit of financial statements is influenced by a variety of factors including our assessment of materiality, our preliminary assessment of the risks of material misstatement, our audit approach, and the nature, timing and extent of the auditing procedures that we conduct. Accordingly, we gain only a limited understanding of controls as a result of the procedures that we conduct during an audit of financial statements. We will inform the financial committee and management of any significant deficiencies that are identified in the course of conducting the audit. © Deloitte LLP and affiliated entities. 13 The City of Saint John. — 2016 Audit Service Plan SvJd�..s airfllhv`e audit pro ddl"du1re¢" Our substantive audit procedures consist of a tailored combination of analytical procedures and detailed tests of transactions and balances. These procedures take into account the results of our controls tests and are designed to enable us to obtain reasonable assurance that the financial statements are free from material misstatements. To obtain this assurance, misstatements that we identify while performing substantive auditing procedures will be considered in relation to the financial statements as a whole. Any misstatements that we identify, other than those that are clearly trivial (the threshold has been set at 5% of materiality, will be reported to management and the financial committee. In accordance with Canadian GARS, we will request that misstatements be corrected. IlRepoirthing aind assesshng Il our oururrir muco ,',"'erwfoinnn Ip��)s� eii,"gagei�,irireii,"�� acPahVHiie We will analyze the results of the audit procedures performed throughout the year and, prior to rendering our report, we will conclude whether: • The scope of the audit was sufficient to support our opinion, and • The misstatements identified during the audit do not result in the financial statements being materially misstated We have developed important safeguards and procedures to protect our independence and objectivity. If, during the year, we identify a breach of independence, we will communicate it to you in writing. Our communication will describe the significance of the breach, including its nature and duration, the action taken or proposed to be taken, and our conclusion as to whether or not the action will satisfactorily address the consequences of the breach and have any impact on our ability to serve as independent auditor to the City. We are independent of the City and we will reconfirm our independence in our final report to the financial committee. © Deloitte LLP and affiliated entities. 14 The City of Saint John. — 2016 Audit Service Plan Appendix 2 — Communication requirements Audit service plan 1. Our responsibilities under Canadian GARS, including CAS' 260.14 X forming and expressing an opinion on the financial statements 2. An overview of the overall audit strategy, addressing: CAS 260.15 X a) Timing of the audit b) Significant risks, including fraud risks c) Nature and extent of specialized skill or knowledge needed to perform the planned audit procedures related to significant risk d) Names, locations, and planned responsibilities of other independent public accounting firms or others that perform audit procedures in the audit 3. Significant transactions outside of the normal course CAS 260 App. 2, X X X of business, including related party transactions CAS 550.27 Enquiries of those charged with governance 4. How those charged with governance exercise CAS 240.20 X X oversight over management's process for identifying and responding to the risk of fraud and the internal control that management has established to mitigate these risks 5. Any known suspected or alleged fraud affecting the CAS 240.21 X X X City 6. Whether the City is in compliance with laws and CAS 250.14 X X regulations ' CAS: Canadian Auditing Standards — CAS are issued by the Auditing and Assurance Standards Board of CPA Canada © Deloitte LLP and affiliated entities. 15 The City of Saint John. — 2016 Audit Service Plan 9 Year-end communication 7. Fraud or possible fraud identified through the CAS 240.40-.42 audit process 8. Significant accounting policies, practices, unusual CAS 260.16 a. transactions, and our related conclusions 9. Alternative treatments for accounting policies and CAS 260.16 a. practices that have been discussed with management during the current audit period 10. Matters related to going concern CAS 570.23 11. Management judgments and accounting estimates CAS 260.16 a. 12. Significant difficulties, if any, encountered during the CAS 260.16 b. audit 13. Material written communications between CAS 260.16 c. management and us, including management representation letters 14. Other matters that are significant to the oversight of CAS 260.16d. the financial reporting process 15. Modifications to our opinion(s) CAS 260.A18 16. Our views of significant accounting or auditing CAS 260.A19 matters for which management consulted with other accountants and about which we have concerns 17. Significant matters discussed with management CAS 260.A.19 18. Matters involving non-compliance with laws and CAS 250.23 regulations that come to our attention 19. Significant deficiencies in internal control, if any, CAS 265 identified by us in the conduct of the audit of the financial statements 20. Uncorrected misstatements and disclosure items CAS 450.12-13 21. Any significant matters arising during the audit in CAS 550.27 connection with the City's related parties © Deloitte LLP and affiliated entities. 16 The City of Saint John. — 2016 Audit Service Plan 10 Appendix 3 — Audit team We are led by Geoffrey Cochrane, lead client service partner. As a team we are committed to delivering on Deloitte's client service principles to: • make and meet our commitments to our clients • understand our clients' business and what is important to them • provide value and build the City through technical competence and consistent results • demonstrate professionalism through effective interaction and communications, and • provide a no surprises experience. The team will assist Mr. Cochrane in delivering on these commitments. The team consists of industry professionals with diverse skills from a number of disciplines to meet the City's needs. Geoffrey Cochrane Lead Client Service and Audit Partner 1(506) 663-6696 Barb Leaman Partner — Risk Advisory 1(506) 663-6693 Jeremy Mallais Manager - Audit 1(506) 663-6740 Keith MacDonald Senior - Audit 1(506) 663-6704 Jennifer Connolly Senior - Audit 1(506) 663-6714 Nicholas Chamberlain Senior Consultant — Risk Advisory 1(506) 663-6618 © Deloitte LLP and affiliated entities. 17 The City of Saint John. — 2016 Audit Service Plan 11 Appendix 4 — 2016 Summary audit timeline This estimated timetable indicates our various procedures and release of our communications as planned throughout the year: Committee and Common Council to present the Audit Service Plan, including documentation required from City staff. Engagement Letter Audit Service Plan Listing of schedules to be completed by city staff (client assistance package) Perform substantive analytical procedures r r ........................... Perform test of details Perform consolidation audit procedures Review draft financial statements © Deloitte LLP and affiliated entities. 18 The City of Saint John. — 2016 Audit Service Plan 12 Review all final financial audit reports and financial statements Obtain management representations, sign audit reports Meeting with management to discuss audit results and obtain management's responses to management letter points raised Meeting with Finance Committee and Common Council to discuss audit results and present management letter © Deloitte LLP and affiliated entities. 19 The City of Saint John. — 2016 Audit Service Plan 13 Appendix 5 — Master service agreement Deloitte LLP Brunswick House 44 Chipman Hill, 7th Deloitte. Floor P.O. Box 6549 Saint John NB E21- 4R9 Canada Tel: (506) 632-1080 Fax: (506) 632-1210 November 17, 2016 www.deloitte.ca Private and confidential The City of Saint John Mr. Kevin Fudge Commissioner of Finance and Administration services 15 Market Square P.O. Box 1971 Saint John, NB E2L 4L1 Dear Mr. Fudge: Re: Master Services Agreement for Professional Services Deloitte LLP ("Deloitte") is privileged to be your professional services provider. The purpose of this letter is to serve as a master services agreement or MSA to describe (a) the services that we will provide to you from time to time, including a description of the scope of our services, and (b) the general business terms related to such services. Services and fees Appendix A — Financial statement audit ("Audit") Should we during the term of this MSA, provide any of the services referenced in Appendix A, the scope, including assumptions, qualifications and limitations, as set out in Appendices A will apply. As of the date of this MSA, the fees will be as indicated in the audit service plan presented and approved by the finance committee of the City of Saint John. This fee includes an administrative charge of 7% of professional fees but is exclusive of consulting fees (see further below), reimbursement for reasonable expenses and applicable taxes. © Deloitte LLP and affiliated entities. 20 The City of Saint John. — 2016 Audit Service Plan 14 noco a or services cnart Entity Services to be provided City of Saint John — Consolidated Financial statement audit City of Saint John — Trust Funds Financial statement audit For purposes of this MSA and the appendices, "financial statements" shall refer to the statements issued by each entity in the context of the services outlined above. Unless otherwise noted in the appendix, "City" shall refer to the entities to which that service is being provided, as outlined above. Mr. Geoffrey Cochrane will be responsible for the services that we perform. Should the nature of our services change in the future from what is set out in the chart above or if there are changes to the entities we serve, we will provide you with a letter confirming the changes. The description of our services as set out in Appendix A in this MSA will continue to apply to any changes set out in a confirmation letter. Also, we may from time to time provide you with updates (including by way of a letter delivered to you in hard copy or electronically via e-mail, by way of a link to our website or otherwise) to the description of the services set out in Appendix A based on changes in applicable professional standards and changes in our practices. Any updates to Appendix A in this MSA provided to you shall form part of this MSA and shall be binding on you. Any changes in fees for subsequent years will be confirmed separately. Also, we would be pleased to provide you with other services, such as consulting and financial advisory services, subject to our professional rules. The scope and fees for such services would be contained in a separate letter and, unless otherwise agreed, the general business terms that are contained in this MSA will apply. Term Our mutual intention is that this MSA applies to all services Deloitte provides to you over time, including for the year ends referred to above and all other work in the future. In accordance with section 2 of the general business terms, this MSA can be terminated on 30 days' written notice. Our responsibilities Our responsibilities will depend on the services we provide. Specific conditions may apply and if this is the case, we will bring them to your attention in the attached appendices. We are committed to client service. Here are our client service standards: • Making and meeting our commitments to you; • Working with you to understand your business and what is important to you; • Providing value and building trust through technical competence and consistent results; • Demonstrating professionalism through effective interaction and communication; and • Providing a no surprises experience. Your responsibilities Our expectations of you can simply be summarized as follows: Cooperation and honesty from you and those who work for you; Your clear articulation of your expectations of us and your clarification when needed, so we can be sure that you receive the professional services you need; If we are providing audit, review or notice to reader services, we want you to know that these are not forensic audits or special services that would more likely identify a fraud or wrongdoing. We are relying on your controls, your honesty and good faith and that of management and the people who work for you; © Deloitte LLP and affiliated entities. 21 The City of Saint John. — 2016 Audit Service Plan 15 You will make all management decisions; and Prompt payment of our invoices. Also, our work product is prepared for you. Our services will not be planned or conducted in contemplation of reliance by third parties. Our agreement is with you and no one else. We have no responsibility to those who are not parties to this MSA. General business terms The general business terms attached to this letter apply to the services we provide to you from time to time. We know how busy you are and we promise to keep our correspondence to you as direct and simple as we can. But if at any time you have questions, please do not hesitate to ask. If this MSA, including the appendices and the general business terms, are acceptable and the services described are in accordance with your understanding, please sign the copy of this MSA in the space provided below and return it to us to indicate your agreement. Yours truly, Chartered Professional Accountants Geoffrey Cochrane, CPA, CA Partner Enclosure The services and terms set forth in and incorporated into this letter are accepted and agreed to by The City of Saint John management: Signature Title Date © Deloitte LLP and affiliated entities. 22 The City of Saint John. — 2016 Audit Service Plan 16 General business terms The City of Saint John November 17, 2016 The following general business terms (the "GBTs") apply to all services that are performed under this MSA and any separate confirmation letters (the "Confirmation Letters") that further amend or describe services issued under this MSA (the "Services") between Deloitte LLP, a limited liability partnership organized under the laws of Ontario ("Deloitte") and you, the City or other entity that is a party to this MSA (the "Client"). The GBTs, the MSA, (including the appendices to the MSA), as such MSA and appendices may be updated and amended from time to time, and the Confirmation Letters are together the "Agreement". 1. Timely performance - Deloitte will not be liable for failures or delays in performance that arise from causes beyond Deloitte's control, including the untimely performance by the Client of its obligations. 2. Termination - Either Deloitte or the Client may terminate this Agreement and any Services for convenience on 30 days' written notice to the other party. Should either party fail to fulfill their responsibilities under the Agreement, the other party may terminate this Agreement on 30 days' written notice. The Client will pay for time and expenses incurred by Deloitte up to the termination date together with reasonable time and expenses incurred to bring the Services to a close in a prompt and orderly manner. 3. Fees - Any fee estimates take into account the agreed-upon level of preparation and assistance from the Client and Client personnel. Deloitte will advise the Client on a timely basis should this preparation and assistance not be provided or should any other circumstances arise which cause actual time to exceed that estimate. 4. Billing - All invoices shall be due and payable when rendered. Interest shall be calculated at a simple daily rate of 0.0493% (equivalent to 18% per annum). Interest shall be charged and payable at this rate on any part of an invoice which remains unpaid from 30 days after the invoice date to the date on which the outstanding invoice is paid. To the extent that as part of the Services to be performed by Deloitte as described in the Agreement, Deloitte personnel are required to perform the Services in the United States of America ("U.S. Business"), the Client and Deloitte agree to assign performance of the U.S. Business to Deloitte Canada LLP, an affiliate of Deloitte. All Services performed by Deloitte Canada LLP shall be performed under the direction of Deloitte which shall remain responsible to the Client for such Services. Deloitte Canada LLP shall invoice the Client with respect to the U.S. Business and Deloitte will invoice for Services performed in Canada ("Canadian Business"). Payment for U.S. Business and/or Canadian Business can be settled with one payment to Deloitte. 5. Governing law - The Agreement will be governed by the laws of the Province where Deloitte's principal office performing the Services is located and all disputes related to the Agreement and Services shall be subject to the exclusive jurisdiction of the courts of such Province. 6. Working papers - All working papers, files and other internal materials created or produced by Deloitte related to the Services are the property of Deloitte. In the event that Deloitte is requested by the Client or required by legal or regulatory process to produce its files related to the Services in proceedings to which Deloitte is not a party, the Client will reimburse Deloitte for its professional time and expenses, including legal fees, incurred in dealing with such matters. © Deloitte LLP and affiliated entities. The City of Saint John. — 2016 Audit Service Plan 21 23 7. Third parties - Deloitte's Services are not planned or conducted in contemplation of, or for the purpose of, reliance by any third party (other than the Client and any party to whom Deloitte's report is addressed) or with respect to any specific transaction. Therefore, items of possible interest to a third parry will not be addressed and matters may exist that would be assessed differently by a third parry, possibly in connection with a specific transaction. The Client shall use the advice, opinions, reports or other work product of Deloitte solely for the purposes specified in this Agreement and, in particular, shall not, without the prior written consent of Deloitte, use any advice, opinion, report or other work product of Deloitte in connection with business decisions of any third parry or for advertisement purposes. All Services are only intended for the benefit of the Client and any party to whom Deloitte's report is addressed. The mere receipt of any advice, opinions, reports or other work product by any other persons is not intended to create any duty of care, professional relationship or any present or future liability between those persons and Deloitte. As a consequence, if copies of any advice, opinions, reports or other work product (or any information derived therefrom) are provided to others under the above exclusions, it is on the basis that Deloitte owes no duty of care or liability to them, or any other persons who subsequently receive the same. Nothing in this section shall be construed as limiting or restricting disclosure of the tax treatment or tax structure of the transaction as described in Rule 3501(c)(i) of PCAOB Release 2005-014 or Internal Revenue Code sections 6011 and 6111 and related Internal Revenue Service guidance. 8. Privacy - Deloitte and the Client agree that, in connection with the engagement, Deloitte may collect, use, disclose and otherwise process personal information about identifiable individuals ("Personal Information"). Deloitte's Services are provided on the basis that the Client has obtained any required consents under applicable privacy legislation for collection, use, disclosure and processing to Deloitte of Personal Information. 9. Confidentiality - To the extent that Deloitte collects or is provided with Personal Information or any proprietary or confidential information of the Client (collectively, "Confidential Information"), Deloitte will not disclose such information to any third party without the Client's consent, except as may be required or permitted by law, regulation, legal authority or professional obligations, or as otherwise permitted by this Agreement. Confidential Information may be disclosed by Deloitte to its affiliates and to member firms of Deloitte Touche Tohmatsu Limited and their respective subsidiaries and affiliates ("Deloitte Entities"), component auditors and third parties that provide services to Deloitte. Confidential Information collected by or provided to Deloitte in connection with the Services may be used, processed, disclosed and stored outside Canada by Deloitte, Deloitte Entities, component auditors or third parry service providers to Deloitte. Deloitte is responsible to the Client for causing any such Deloitte Entities, component auditors and third party service providers to comply with the obligations of confidentiality set out in this section of the Agreement. Confidential Information may be subject to disclosure in accordance with laws applicable in the jurisdiction in which the information is used, processed or stored. The Client also agrees that Deloitte may aggregate Confidential Information and use and disclose that information as part of research and advice, including, benchmarking services, provided that all such information will be rendered anonymous and not subject to association with the Client. Except as instructed otherwise in writing, each party consents to the transmission by fax, email and voicemail, both confidential and other types of documents, correspondence and any other information relating to the execution of this Agreement. It is recognized that the parties will use the internet and that the internet may be insecure. Each party will be responsible for protecting its own systems and interests and, to the fullest extent permitted by law, will not be responsible to the other on any basis (contract, tort or otherwise) for any loss, damage or omission in any way arising from the use of the internet by either party or its personnel, including any Deloitte Entity and subcontractor personnel, to access the networks, applications, electronic data or other systems of the other party. © Deloitte LLP and affiliated entities. 24 The City of Saint John. — 2016 Audit Service Plan 18 10. Limitation on liability - The Client and Deloitte agree to the following with respect to Deloitte's liability to the Client: a. The Client agrees that Deloitte shall not be liable to the Client for any claims, liabilities, or expenses relating to this Agreement and any Services for an aggregate amount in excess of three times the fees paid by the Client to Deloitte in the twelve months preceding the incident giving rise to the claim. b. In no event shall Deloitte be liable for consequential, special, indirect, incidental, punitive or exemplary loss, damage, or expense relating to this Agreement or any Services for any loss of revenue or profit, loss of opportunity, loss of data, or any other commercial or economic loss or failure to realize expected savings. c. In any action, claim, loss or damage arising out of this Agreement and any Services, the Client agrees that Deloitte's liability will be several and not joint and several and the Client may only claim payment from Deloitte of Deloitte's proportionate share of the total liability based on the degree of fault of Deloitte. The provisions of this section shall apply to the fullest extent of the law, whether in contract, statute, tort (such as negligence), or otherwise. This section shall survive termination or expiry of the Agreement. The provisions of this section shall not apply to any liability which by the governing law of the Agreement is unlawful to limit or exclude. In furtherance of the foregoing, from time to time, Deloitte may have individual partners and employees performing the Services within the Province of Quebec who are members of the Ordre des comptables professionnels agrees du Quebec. The limitations outlined above in this Section 10 shall not apply to limit the personal civil liability of members of the Ordre des comptables professionnels agrees du Quebec performing professional Services hereunder (and with respect to such members, such limitations shall be deemed not to be included in this Agreement). For purposes of this section, "Deloitte" shall mean Deloitte LLP and its directors, officers, partners, professional corporations, employees, subsidiaries and affiliates and to the extent providing Services, any Deloitte Entities and all of their partners, principals, members, owners, directors, staff and agents; and in all cases any successor or assignee. The Client agrees that any claims that may arise out of this Agreement or any Services will be brought solely against Deloitte as the contracting party and not against any other Deloitte Entities. 11. Assignment - Except as provided herein, no party may assign, transfer, or delegate any of its rights or obligations relating to the Agreement without the prior written consent of the other party. Deloitte may assign its rights and obligations under this Agreement to any affiliate or successor in interest to all or substantially all the assets or business of the relevant Deloitte practice. 12. Deloitte Entities and subcontractors - Deloitte may use the services of any Deloitte Entities, component auditors, or other subcontractors (including those operating outside Canada) to assist Deloitte. Deloitte remains responsible to the Client for Services performed by Deloitte Entities and subcontractors. 13. Survival - Any clause that is meant to continue to apply after termination of the Agreement will do so. 14. Entire Agreement - The Agreement forms the entire agreement between the parties in relation to the Services and supersedes all other oral and written representations, understandings or agreements related to the Services. 15. Severability - If a court or regulator with proper jurisdiction determines that a provision of this Agreement is invalid, then that provision will be interpreted in a way that is valid under applicable law or regulation. If any provision is invalid, the rest of the Agreement will remain in effect. 16. Qualifications - Notwithstanding anything herein to the contrary, Deloitte may use the name of the Client, refer to this Agreement and the performance of Services in marketing, publicity materials and other material, as an indication of its experience, and in internal data systems. 17. Tax services and review by tax authorities - The Client shall cooperate with Deloitte in the performance by Deloitte of tax related Services, including, without limitation, providing Deloitte with reasonable facilities and timely access to data, information and personnel of the Client. Client shall be responsible for the performance of its personnel and agents, for the timeliness, accuracy and completeness of all data and information (including all financial information and statements) provided © Deloitte LLP and affiliated entities. 25 The City of Saint John. — 2016 Audit Service Plan 19 18 19 to Deloitte by or on behalf of the Client and for the implementation of any advice, opinions, reports or other work product in any form provided as part of the Services. Deloitte may use and rely on information and data furnished by the Client or others without verification. Deloitte's performance shall be dependent upon the timely performance of the Client's responsibilities hereunder and timely decisions and approvals of the Client in connection with the Services. Deloitte shall be entitled to rely on all decisions and approvals of the Client. To the extent the Client requests tax related Services, Deloitte will use professional judgment in resolving questions affecting the Client relating to the tax Services to be provided by Deloitte. Where there are alternative filing positions or tax transactions, Deloitte will undertake to describe the benefits and risks of each so that the Client can make an informed decision. All returns are subject to examination by taxation authorities and the Client's returns may be audited and challenged by Canadian and other tax authorities. The Client understands that Deloitte's tax advice or opinions are not binding on tax authorities or the courts and should never be considered a representation, warranty, or guarantee that the tax authorities or the courts will concur with Deloitte's advice or opinion. Any tax assistance provided by Deloitte will be based upon the law, regulations, cases, rulings, and other tax authority in effect at the time the specific tax assistance is provided. Deloitte may provide the Client with draft copies of returns or tax advice. Where any drafts are finalized and provided to the Client in final form, such previous drafts should not be relied upon. Nothing in this Agreement shall be construed as limiting or restricting disclosure of the tax treatment or tax structure of any transaction as described in the rules of any taxation authority, including Canada Revenue Agency and the Internal Revenue Service. Electronic messaging - In accordance with Canadian anti -spam legislation, the Client consents to Deloitte contacting the Client and its personnel through electronic messages relating to Deloitte's Services, products and other matters of interest to the Client after the completion of this Agreement. The Client may withdraw any such consent by contacting Deloitte at unsubscribendeloitte.ca. Language - The parties have requested that this Agreement and all communications and documents relating hereto be expressed in the English language. Les parties ont exige que la presente convention ainsi que tous les documents s'y rattachant soient rediges dans la langue anglaise. © Deloitte LLP and affiliated entities. 26 The City of Saint John. — 2016 Audit Service Plan 20 Appendix A Financial statement audit The City of Saint John November 17, 2016 Our audit services and audit scope The consolidated financial statements We may be requested by you from time to time to audit the consolidated financial statements of the City of Saint John. These financial statements are comprised of the consolidated statement of financial position as at the fiscal year end of the City ("Fiscal Year"), and the consolidated statements of operations and accumulated surplus, change is net debt and cash flows for the Fiscal Year, and a summary of significant accounting policies and other explanatory information. The non -consolidated financial statements We may be requested by you from time to time to audit the non -consolidated financial statements of the City of Saint John — Trust Fund. These financial statements comprise the non -consolidated statement of financial position as at the Fiscal Year end and the non -consolidated statement of operations, changes in net assets and cash flows for the Fiscal Year, and a summary of significant accounting policies and other explanatory information. The consolidated and non -consolidated financial statements (the "financial statements"), subject to audit are those of the City, prepared by management, with oversight from those charged with governance ("Finance Committees"). The objective of our audit is to express an opinion on whether the financial statements are fairly presented, in all material respects, in accordance with Canadian public sector accounting standards ("PSAS"). We plan and perform the audit to obtain reasonable assurance that the financial statements as a whole are free from material misstatement, whether due to fraud or error. Our audit report On completion of our audit procedures, we expect to issue an audit report in the form set out in Canadian Auditing Standard 700. If we are unable to issue or decline to issue an audit report, we will discuss the reasons with management and the Finance Committees. There may be circumstances in which our report may differ from the expected form and content in light of our audit findings. Our responsibilities Performance of the audit We will conduct our audit in accordance with Canadian generally accepted auditing standards ("Canadian GAAS"). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. © Deloitte LLP and affiliated entities. AXI The City of Saint John. — 2016 Audit Service Plan 21 Because of the inherent limitations of an audit, together with the inherent limitations of internal control, there is an unavoidable risk that some material misstatements may not be detected, even though the audit is properly planned and performed in accordance with Canadian GAAS. Information on internal controls We do not consider internal controls in order to express any opinion to you on their effectiveness. We consider internal controls relevant to the City's preparation and fair presentation of the financial statements in making our risk assessments and in order to design appropriate audit procedures. We will, however, communicate to you in writing concerning any significant deficiencies in internal control relevant to the audit of the financial statements that come to our attention during the course of our engagement. Communication with the Finance Committee The Finance Committee is responsible for the oversight of the financial reporting process and our work as auditors. We are required to communicate with the Finance Committees about certain matters that may arise during our audit and that may be significant to their role. These matters may include, but are not limited, to: • the planned scope and timing of the audit; • our views about significant qualitative aspects of the City's accounting practices, including accounting policies, accounting estimates and financial statement disclosures; • any matters identified that may cast doubt on the City's ability to continue as a going concern; • any significant difficulties encountered during the audit; • any significant matters that were discussed or subject to correspondence with management; and • written representations we are requesting. Fraud and illegal acts An audit designed and executed in accordance with Canadian GAAS may not detect fraud or illegal acts. However, it is possible that actual and potential fraud or illegal acts may be discovered during the course of our audit. We will communicate actual or potential fraud or illegal acts identified during the audit to, in our sole judgement, the appropriate level of management and / or the Finance Committees depending on the type and significance of the issue. Your responsibilities Financial statements and internal control The audit of the financial statements does not relieve management or the Finance Committees of their responsibilities. You are responsible for the preparation and fair presentation of the financial statements in accordance with PSAS. You are also responsible for establishing internal control necessary for the preparation of financial statements that are free from material misstatement, whether due to fraud or error. You must determine what internal control is required, including how it is designed, implemented and maintained. You will advise us of any deficiencies identified and any changes in internal control over financial reporting. Access to information and personnel You are responsible for providing us with access to all information that is relevant to your preparation of the financial statements and any additional information that we may request for the purpose of the audit. You will also provide unrestricted access to persons in the City or others from whom we determine we need to obtain evidence for our audit. Prevention of fraud and error You are responsible for designing and implementing programs and controls to prevent and detect fraud, illegal acts and error. You will inform us about all known or suspected fraud, illegal acts or errors affecting the City. You will © Deloitte LLP and affiliated entities. The City of Saint John. — 2016 Audit Service Plan 22 28 further inform us or any allegations of fraud, illegal acts or potential errors received in communications (written or oral) from employees, former employees or any other parties external to the City. Compliance with laws and regulations You are responsible for identifying and ensuring that the City complies with the laws and regulations applicable to its activities. You will inform us of any known or possible violations of these laws or regulations. Related parties You will identify the City's related parties and whether the City entered into any transactions with these related parties in the time period under audit. Subsequent events You will advise us of whether any events have occurred between the date of the balance sheet and the date our audit report is released, that may affect the financial statements. Correction of material errors You are responsible for adjusting the financial statements to correct material misstatements identified during the course of our audit engagement. Representation letter As part of our engagement procedures, you will provide written confirmation of representations made to us in connection with the audit. Disclosure of report We are engaged solely by the City to perform an audit engagement the purpose of which is to provide an opinion as to whether the financial statements are free from material misstatement. We do not have any responsibility to other parties who choose to rely on our audit report for their own purposes. You will not, without obtaining our prior written consent: • publish or reproduce our report in any document that contains the financial statements; • make reference to our firm in a document which contains other information in addition to the financial statements; or • place our report on an electronic site. In order for us to consider granting such written consent, you must provide adequate notice of your request as well as provide any draft document which is proposed to contain/refer to our report. If written consent is provided by us, you are solely responsible for the accurate and complete reproduction of our report and the financial statements on which we reported. Independence It is your responsibility to have policies and procedures in place to ensure that the City (together with its subsidiaries and other related entities) does not engage us or accept services from us that may impair our independence under applicable professional rules. In order to assist us in maintaining independence, you will also notify us of any substantive employment conversations that have occurred with current or former Deloitte personnel. Finance Committees' responsibilities The Finance Committees is responsible for the oversight of the financial reporting process, including management's preparation of the financial statements and monitoring of the City's internal controls related to financial reporting and oversight of our work. © Deloitte LLP and affiliated entities. The City of Saint John. — 2016 Audit Service Plan 23 29 The City of Saint John 2017 GENERAL OPERATING BUDGET City of Saint John 2017 Budget REVENUES Property taxes Federal Payment in Lieu of Taxes (PILT) Equalization & Unconditional Grant 2016 Approved Budget 120,141,178 41,244 19,923,206 2017 Proposed Budget 120,141,178 19,923,206 Surplus 2nd previous year - 416,472 Growth & Community Development Services 2,056,300 2,815,150 Public Safety Services 2,231,368 2,013,605 Transportation & Environment Services 2,894,027 3,884,188 Finance & Administrative Services 4,164,861 3,776,516 Corporate Services 90,000 30,000 TOTAL REVENUES 151,542,184 153,000,315 EXPENDITURES Growth & Community Development Services 4,241,016 4,591,016 Economic Development Service Growth & Community Planning Services Economic development agencies Growth & Community Planning Services 1,535,850 1,777,370 One Stop Development Shop Services Saint John Development Corporation 270,000 - Heritage Conservation 231,905 200,289 Permitting & Inpection Service & By -Law Compliance 1,948,602 2,083,117 Infrastructure Development 524,659 530,240 Destination Marketing Organization 965,600 - 1,980,600 2,048,495 Saint John Trade and Convention Centre 619,314 616,635 Harbour Station 473,782 485,880 Urban Development Service Market Square - Common Area 3,073,696 3,151,010 2,333,116 2,278,546 Total Growth & Community Development Services 9,647,828 10,020,572 Public Safety Services 091 4,241,016 4,591,016 Economic Development Service Economic development agencies Economic Development Agencies - 2,048,495 Regional Economic Development (Enterprise) 475,000 - Saint John Development Corporation 270,000 - Saint John Industrial Parks 270,000 - Destination Marketing Organization 965,600 - 1,980,600 2,048,495 Saint John Trade and Convention Centre 619,314 616,635 Harbour Station 473,782 485,880 Urban Development Service Market Square - Common Area 3,073,696 3,151,010 2,333,116 2,278,546 Total Growth & Community Development Services 9,647,828 10,020,572 Public Safety Services 091 The City of Saint John 2017 GENERAL OPERATING BUDGET City of Saint John 2017 Budget 2016 Approved Budget 2017 Proposed Budget Fire Rescue and Suppression Service 21,721,402 21,731,402 Water Supply and Hydrants 2,400,000 2,300,000 Emergency Management Service 316,239 322,251 Police Services 24,219,759 24,769,759 Public Safety Communications 2,480,400 2,371,544 Street Lighting 937,300 937,300 Total Public Safety Service 52,075,100 52,432,256 Transportation & Environment Service Roadway Maintenance Service Snow Control Streets Street Cleaning 6,004,989 5,743,331 1,616,628 1,316,119 Utility Cuts - 550,000 Street Services - Surface Maintenance 4,375,848 4,905,411 11,997,465 12,514,861 Sidewalk Maintenance Service Snow Control Sidewalk 1,061,823 1,049,661 Sidewalk Maintenance 724,411 781,596 Sports & Recreation Facilities Service Arena Operation and Maintenance Sportsfield Operation and Maintenance Other Facility Operation and Maintenance Minor Hockey Subsidy Aquatic Clubs Lord Beaverbrook Rink 31 3,129,635 1,786,234 1,831,257 Pedestrian & Traffic Management Service 2,090,525 2,448,312 Stormwater Management 3,760,440 3,469,155 Solid Waste Management 3,629,410 3,747,324 Engineering 501,353 542,741 Parks & City Landscape Parks Maintenance 2,639,425 2,696,162 Lifeguards 158,245 164,000 Urban Forestry 286,965 296,392 Mispec 5,000 5,000 Saint John Horticultural Association 40,000 40,000 Sports & Recreation Facilities Service Arena Operation and Maintenance Sportsfield Operation and Maintenance Other Facility Operation and Maintenance Minor Hockey Subsidy Aquatic Clubs Lord Beaverbrook Rink 31 3,129,635 3,201,554 1,472,298 1,417,269 1,239,657 1,186,082 403,375 400,554 173,000 173,000 15,822 15,822 158,102 159,100 2 The City of Saint John 2017 GENERAL OPERATING BUDGET City of Saint John 2017 Budget 2016 Approved Budget 2017 Proposed Budget Aquatic Centre 636,494 505,431 4,098,748 3,857,258 Neighbourhood Improvement 624,313 653,419 Community Development 326,824 327,953 Neighbourhood Development 152,000 152,000 Loch Lomond Community Centre 45,000 45,000 PRO Kids 100,489 128,466 Recreation, Parks and Cultural Programming 624,313 653,419 Community Development Service Grants 906,052 878,126 Community Grant Program - 179,721 Cherry Brook Zoo 50,000 - PRUDE Rent 20,000 - Human Development Council - Grant & Rent 50,000 - Unspecified Grants 59,721 - 179,721 179,721 Library 478,579 478,579 658,300 658,300 Recreation, Parks and Cultural Programming Recreation Programming 906,052 878,126 Contracted Service - Boys and Girls Club 129,911 129,911 Contracted Service - YMCA-FGCC/MCC 159,085 159,085 Contracted Service - North End Community Centre 144,795 144,795 PlaySJ Recreation Programming Grant 15,000 15,000 1,354,843 1,326,917 Parking Service (Administration Support) 602,655 602,655 Parking Commission Grant - Property Tax 88,000 89,525 Transit Service 7,212,717 7,387,806 Total Transportation & Environment Service Finance and Administrative Services Financial Management Service Finance Assessment Information Technology Systems 0 41.534.638 42.331.084 1,695,452 1,710,083 1,305,736 1,305,736 3,001,188 3,015,819 3 The City of Saint John 2017 GENERAL OPERATING BUDGET City of Saint John 2017 Budget 2016 Approved Budget 2017 Proposed Budget Information Technology 2,201,626 2,207,391 Geographic Information Systems 364,834 348,680 2,566,460 2,556,071 Asset Management 13,521,532 13,700,645 Purchasing & Materials Management 1,048,413 1,096,765 Insurance Service 269,215 269,477 Liability Insurance 295,000 304,000 Fleet 1,583,263 1,423,000 Facilities Management 1,136,755 1,189,193 City Market 1,034,283 1,033,746 Carpenter Shop 389,014 333,696 City Hall Building 1,878,337 2,139,261 Real Estate 319,604 339,617 7.953.884 8.128.755 Total Finance and Administrative Services 13,521,532 13,700,645 Strategy, Continuous Improvement & Performance Reporting 368,849 368,849 Corporate Services 456,889 456,889 City Manager 665,994 665,994 Legal Department 739,942 739,942 Common Clerk 642,938 642,938 Cultural Affairs 119,688 119,688 Arts & Culture Grants and Other Funding Imperial Theatre 347,920 348,401 Saint John Arts Centre 84,119 84,236 Arts & Culture Board 35,000 35,000 Public Art - Maintenance and Repair 10,000 10,000 ECMA 50,000 75,000 Remembrance Day Ceremonies 2,000 2,000 New Year/Canada Day Celebrations 15,000 15,000 544,039 569,637 Human Resources 1,517,345 1,517,345 Strategy, Continuous Improvement & Performance Reporting 368,849 368,849 Corporate Communications 456,889 456,889 Regional Services Commission 28,381 24,227 Mayor & Council Mayor's Office 167,583 167,583 4 093 The City of Saint John 2017 GENERAL OPERATING BUDGET City of Saint John 2017 Budget 2016 Approved Budget 2017 Proposed Budget Council 382,350 382,350 549.933 549.933 Total Corporate Services 5,633,998 5,655,442 Other Charges Fiscal Charges 16,031,173 16,560,407 Long Term Disability 1,098,605 993,000 Deficit 2nd previous year 799,546 - Pension 9,356,810 9,124,000 Others 1,842,954 2,182,909 Total Other Charges 29,129,088 28,860,316 TOTAL EXPENDITURES 151,542,184 153,000,315 5 0111 FINANCE COMMITTEE REPORT M&C No. i/ fOLM(t OfSh,1 ej)0iW Report Date November 15, 2016 Meeting Date November 17, 2016 Service Area Finance and Administrative Services Members of the Finance Committee Finance Chair and Members of Council SUBJECT: 2017 General Operating Budget OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee AUTHORIZATION Primary Author Commissioner/Dept. HeadL4 City Manager Hilary Nguyen Kevin Fudge m I Jeff Trail RECOMMENDATION It is recommended that the Finance Committee approve the proposed 2017 General Operating Budget and submit to Council for information at the meeting of November 28, 2016. EXECUTIVE SUMMARY The first draft of the 2017 General Operating Budget was presented to the Finance Committee on September 15, 2016. A series of budget presentations were made by service areas to the Finance Committee on October 6 and 13, 2016. In addition, the draft General Operating Budget supports Council Priorities adopted on October 31st, 2016. The Committee approved funding envelopes for the Community Grants Program and the Police Commission on November 8, 2016. The proposed General Operating Budget includes a stable tax rate of $1.785 with gross expenditures of $153,000,315, which represents a 0.96% increase over 2016. At this point, property tax and unconditional grant information has not been released by the Province of New Brunswick. The 2017 budget has been prepared based on the assumption that assessment base growth is flat and that the unconditional grant remains unchanged compared to the prior year. The purpose of this report is to provide the Finance Committee with the proposed 2017 General Operating Budget for submission to Council for information on November 28, 2016. PREVIOUS RESOLUTION Not Applicable W -2 - STRATEGIC ALIGNMENT Common Council has pursued a strategic approach to establishing its priorities over its four year term. In October 2016, Common Council participated in a series of priority setting sessions to determine what goals and objectives will be acted upon during Council's term in supporting the Community to achieve its long-term vision — Our Saint John. Council's governance role is to set strategic priorities that will guide decision making in terms of resource allocation, policy setting as well as performance reporting to demonstrate accountability for service results. The sessions also provided important feedback for the City Manager in setting guidelines for the 2017 service based budget. Common Council has established the following strategic priorities: Growths & (Prosperity: Saint John is recognized by residents and businesses as a positive and supportive city. We grow in a smart way and attract talent, innovation and opportunities so all people can thrive. CrowSJ ➢ Drive development in accordance with PlanSJ that creates density required for efficient infrastructure and services. ➢ Promote Saint John as a community to live, work and play to grow the residential tax base. ➢ Advocate for equitable taxation among residents, commercial businesses, institutions and industry. Strong Economy ➢ Ensure Saint John has a competitive business environment for investment. ➢ Support the retention and attraction of businesses that create job opportunities. Saint John is home to unique, livable neighborhoods that offer a variety of housing options and appropriate transportation choices. Residents celebrate our history, enjoy a variety of cultural and recreation activities, and appreciate our greenspaces and waterways. ➢ Develop neighbourhoods through planning that aligns with PlanSJ and includes: ➢ Accessible, reliable and cost-effective public and active transportation ➢ Streetscape beautification -3- ➢ Modernization of heritage preservation processes ➢ Park and greenspace investment that aligns with PlaySJ ➢ Ensure that the delivery of efficient public safety services address the evolving needs of a growing community. • Invest in arts, culture and recreation experiences that create a sense of community pride. alllUed Service Ddlllveryw Saint John invests in sustainable city services and municipal infrastructure. Our community is engaged and understands what they can expect from service delivery. n S Et M a in �� g EIr'n Ein t ➢ Develop an integrated asset management plan that aligns with PIanSJ to prioritize investment. ➢ Invest in strategic road improvements. �a S � .u.����nt:':Ir'�n:��.lr ��:�:a:.:u.���n� �..����.Ir�rlla ���.S ➢ Explore service improvements through innovation, technology and developing partnerships with other organizations. ➢ Define service levels for all City services. ➢ Implement mandate letters with the City's agencies, boards and commissions to define expectations. Fiscally Responsible: Saint John takes a strategic approach to financial management that is equitable, balanced and efficient. Decision making is in line with our strategic plans to ensure our financial sustainability. Financial Health • Develop long-term financial plans and budgets that align capital investment and fiscal capacity with service objectives. • Investigate options to allocate water costs among ratepayers. • Report on performance metrics to show effective service delivery and good fiscal management. Innovation and Improvement • Advance a culture of continuous improvement to drive operational efficiencies. • Leverage opportunities to generate alternative revenue sources. The proposed General Operating Budget is based on the commitments and priorities of Common Council. The report also highlights some of the issues and challenges facing the community in the months and years ahead. Kul -4 - REPORT INTRODUCTION Council priorities determine how resources are allocated and what services are provided. Keeping a stable tax rate is important to businesses and households. However, the needs and wants of a Municipality are usually greater than what the Municipality can afford. Therefore, every year, as part of the General Operating Budget process, choices have to be made. The City's approach to budgeting is to focus on Council priorities and strive to deliver the best value for taxpayers. The 2017 General Operating Budget has been prepared in a fiscally responsible manner. Staff is proposing to hold the line on the tax rate while delivering services that meet Council priorities and are valued by taxpayers. The proposed 2017 General Operating Budget includes a stable tax rate of $1.785 with gross expenditures of $153,000,315, representing a 0.96% increase over 2016. It is also the ninth straight budget without a property tax rate increase. To balance the budget in 2017, difficult decisions have been made to cut goods and services. Some service areas have to cut goods and services by 10% to 15%, which is not sustainable in the long run. At this point, property tax and unconditional grant information has not been released by the Province of New Brunswick. The 2017 budget has been prepared based on the assumption that the assessment base growth is flat and the unconditional grant remains unchanged compared to the prior year. Revenues from own sources total $12,519,459, an increase of 9.5% over 2016 budget. In 2016, the budget was negatively impacted by a carryover deficit from 2014 of $799,546. The 2017 budget is positively impacted by a carryover surplus from 2015 of $416,472. Fiscal challenges The City, as is the case in many cities across the country, is facing significant fiscal challenges. The overall tax base growth has been stagnant since its peak of 9% growth in 2009 to a negative 0.48% in 2014 and 1.53% in 2016. Tax base growth 10.00% 8.00% 6.00% 4.00% 2.00% � uuuuuuuuuuuu......... L........ 0.00% -2.00% ---- 2005 2006 2007 2008 2009 2010 2011 2010 2013 2014 2015 2016 M-11 -5 - This is reflected in lower building permit revenues over the last few years. In 2016, the City has seen increased development activities since the beginning of the year; however, the projected revenue in 2016 is still significantly less than the 2008 or 2009 levels. BUILDING PERMITS Compared to other municipalities of similar size such as Fredericton and Moncton, Saint John has lower municipal tax base per capita. 2016 Municipal Tax Base per Capita While revenues have experienced minimal growth, expenditures, on the other hand, have gone up over the years. About 58% of the City's budget is in wages and benefits, and the incremental expenditures associated with wage increases have outpaced new revenues generated. 061 13,406,8E -6- 2017 Proposed Budget :14:17R ?4n 10,117,000 IIIIIIIIIIII Salaries & Benefits IIIIIIIIIIII Pension & LTD 111111 Fiscal Charges IIIIIIIIIIII ABCs & Grants 11111111111 Goods & Services Debt service costs, including principal and interest, currently account for approximately 10.82% of the General Operating Budget. From 2006 to 2016, the debenture balance has more than doubled. In order to control and retire its debt, the City should limit its borrowing to no more than $12 Mil/year. The following graph shows that with annual borrowing of $12 Mil/year, the City will see its debenture balance go down gradually. Council has identified "fiscally responsibility" as one of its priorities. Debt management is an important component of a long-term financial plan that aligns fiscal capacity with service objectives. A debt management strategy must balance debt retirement with the need to replace aging infrastructure. The proposed 2017 General Capital Budget includes a contingent funding envelope of $8.9 Mil. If these contingent projects move ahead; the City will have to borrow more than $12Mil/year. In order to ensure that the debt level does not go up, the City should reduce its funding envelope in the 3 following years by an amount equivalent to the contingent funding so the overall funding envelope over 4 years stays the same. Based on the existing debt level, debt service costs are projected to trend upward during the next few years and then level off around 2019 if capital borrowings are not more than $12 million/year on an ongoing basis. !II Projected Debenture Balance (12 Mil - City Share/year) 140,000,000 120,000,000 117,093,000 117,055,000 "' 116,217,000 114,580,000 112,931,000 110,956,000 108,916,000 106,461,000 104,134,000 102,507,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 p 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Council has identified "fiscally responsibility" as one of its priorities. Debt management is an important component of a long-term financial plan that aligns fiscal capacity with service objectives. A debt management strategy must balance debt retirement with the need to replace aging infrastructure. The proposed 2017 General Capital Budget includes a contingent funding envelope of $8.9 Mil. If these contingent projects move ahead; the City will have to borrow more than $12Mil/year. In order to ensure that the debt level does not go up, the City should reduce its funding envelope in the 3 following years by an amount equivalent to the contingent funding so the overall funding envelope over 4 years stays the same. Based on the existing debt level, debt service costs are projected to trend upward during the next few years and then level off around 2019 if capital borrowings are not more than $12 million/year on an ongoing basis. !II 20,000,00(' 15,000,00( 10,000,00( 5,000,00( MI Projected Fiscal Charges (3.5% Interest rate, $12 Mil Capital Expenditure (City Share)/Year) -------- -------- 7R 771 7A o opo �n 2017 2018 2019 2020 2021 2022 2023 2024 2025 One of the risks associated with long term borrowing is interest rate risk. Long term borrowing rate is currently at its record low. However, it is likely that the interest rate will go up in the next few years, which will affect the amount that the City has to put aside to service its debt. AVERAGE YIELD 6.000% 5.000% 4.000% 3.000% 2.000% 1.000% 0.000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0) N N N N N N N N N N N N N N N N V T +' CA C C > O. . V T +' CA C C O. V T +' CA C C > V G v v V C G v v v V C G o g 0 Q Z Q (n o g O Q Z Q Vf � o g O Q Z Q Borrowing decisions made today create future fixed debt service payments that compromise flexibility to respond to changing operational circumstances in future years. The fiscal challenges the City is experiencing today are not limited to the 2017 budget year. It is more long term in nature. In the years to come, the City is committed to finding sustainable solutions, among those are to find new revenue sources and to find efficiencies through continuous improvements using proven methodology such as Lean six sigma. :1 PA, -9 - Growth & Community Development Services Services under Growth and Community Development are instrumental to the City's ability to drive positive growth, a key focus area for Council priorities related to Growth and Prosperity. This service area also delivers strategic programs which contribute other Council focus areas related to enabling a Vibrant, Safe City, Valued Service Delivery and Fiscal Responsibility. The proposed 2017 Growth & Community Development Service budget totals $10,020,572, an increase of 3.85% over 2016, mostly due to an increase in development incentive grants. Council Priorities: Growth & Prosperity In 2017, a major focus for the service area will be to support Council's newly formed Growth Committee in developing a strategy to deliver Council priorities related to Growth and Prosperity. To support the work of the Growth Committee and Council, the service area will capitalize on the positive momentum of the successful three year pilot program for Urban Development Incentive programs being targeted in the Central Peninsula. The 2017 budget sustains the level of funding to support established program targets for housing intensification in the Uptown Central Peninsula. The service area will also continue momentum on the One Stop Shop Service improvement program launched in 2016, with a focus on customer facing improvements to fully operationalize the One-stop Development shop and continuous improvement in service targets and other service features. As part of the One-stop Development shop service model, strategic development support will be provided in 2017 for major Uptown and waterfront projects including the Coast Guard redevelopment plans and the proposed new office development on Kings Square. The service area will deliver an annual Economic performance report linked to PlanSJ and will continue efforts to improve coordination with the City's economic development agencies, including ongoing implementation of the recommendations of the 2016 Task Force on Economic Development. !191 -10 - Council Priorities: Vibrant, Safe City To support Council focus area related to a Vibrant, Safe City and the outcome of Great Neighbourhoods, the service area will launch a new initiative, a Neighbourhood Action Plan, to drive growth and improve livability in the City's Central Peninsula urban neighbourhoods. Funding is currently being pursued for this initiative through a grant application to the Federation of Canadian Municipalities Green Municipal Fund with the required funding for this program is included in the 2017 budget. This will position the service area to launch of a new multi-year Neighbourhood Planning program in 2017, with stage one implementation for the Central Peninsula. In parallel with this program, the service area will pursue the modernization of the City's Heritage Bylaw. The service area will coordinate delivery of these programs with the next phase of the Transportation Master Plan, a strategic plan to implement PIanSJ directions to promote more choice in transportation across the community with focus on strategic parking plan Council Priorities: Fiscal Responsibility To support delivery of Council priorities related to Fiscal Responsibility, the service area will lead the implementation of a corporate revenue generation program, including resources to support priority Departmental projects and establish clear short and long-term targets for new or enhanced revenue for the City. Ongoing intergovernmental support and strategic coordination of external funding to other service areas and Common Council will continue to be a priority in order to achieve desired outcomes from Plan SJ, Council Priorities and other strategic projects. In 2017, the service area anticipates a significant and ambitious work -plan and as a result is recommending deferral of the five year review for PIanSJ to make way for impactful new initiatives that will further action PIanSJ and support delivery of Council priorities. !El! -11 - Transportation and Environment Services The Transportation & Environment Services are frontline services that are relied upon every day by the citizens of Saint John. These services collectively account for $42,331,084 of the overall General Operating Budget, an increase of 1.9% over 2016. Transportation and Environment Services support various Council priorities. Council Priorities: Valued Service Delivery f Investment into roads, curbs and sidewalks j continues to be a priority. The combined funding of investment in roads in the 1 / proposed 2017 General Operating and Capital Budgets is approximately $6.71 million ($7.29 Mil in 2016). It should be noted that costs have seen considerable increases in recent years, in particular with the cost of asphalt resurfacing. This cost escalation erodes the amount of resurfacing that can be done with the available funds, and will necessitate future budget increases if this trend continues. The primary objective with respect to investment in roads in any given year is to prevent streets from deteriorating to the point at which they will require more costly reconstruction. The secondary objective is to increase the quality of the road network as measured through the Pavement Condition Index. At the proposed funding levels there will need to be very favorable asphalt tender prices to meet these objectives. Staff will be pursuing additional funding opportunities with other levels of government, and potentially re -allocating maintenance money to maximize the outcome of the City's investment in roads. Council Priorities: Vibrant, Safe City Funding has been included for Phase Two of the Transportation Master Plan (MoveSJ) in 2017. This will create a transportation model of the City and will map out strategies for various transportation modes. This will be particularly valuable in supporting active transportation, and to lay out a strategic roadmap for the Transit and Parking services. !1'7 -12- 2017 will see much change for Saint John Transit. Through federal funding numerous new fleet buses will be ordered and received. New fleet will enable Transit to reduce maintenance costs. In addition, all trips and routes will be reviewed in alignment with PlanSJ and MoveSJ. Strategically, ten of Transit's existing buses and all of the newly ordered buses (twelve) will be equipped with hardware to automatically count ridership — real time. Collection of this data will enable informed prudent operational decisions driving maximum revenue and service. Saint John Transit will take a very active role in the development of Phase II of the Transportation Plan, MoveSJ. Phase II is critical to the success of Transit, and as such Transit will focus on this item as a priority. The Pedestrian & Traffic Management service will complete two new Safer School Zone projects and will be optimizing traffic signals to improve traffic flow in areas including East Point Shopping Centre and the Somerset/Paradise Row intersection. Pedestrian safety enhancements will continue to receive focused attention through traffic calming measures and new crosswalk installations. Staff will continue the rationalization of neighbourhood playgrounds as outlined in PIaySJ and seek to repurpose or dispose of under-utilized facilities so resources can be focused on regional and district parks and facilities. The City's current arena facilities are over forty years old and will require significant investment in future years. PIaySJ recommends an arena strategy be developed that will replace our current arenas with new facilities. Staff will work with the Regional Service Commission and surrounding municipalities to study the region's arena needs in upcoming years which will help chart the course for the City's investment into these new facilities. Council Priorities: Valued Service Delivery Transportation & Environment Services manage a significant number of assets, including streets, sidewalks, street light fixtures, traffic light fixtures, storm water network, etc. The performance of these assets plays a critical role in the successful delivery of services to citizens. In 2017, the service area will actively participate in the development and implementation of an integrated Asset Management plan, which is led by Finance and Administrative Services. The Stormwater Management service will implement a number of projects to address localized drainage issues causing property damage or maintenance challenges. A storm sewer video inspection program will be carried out in -13 - partnership with Saint John Water to obtain asset condition information that can better guide future maintenance and capital investments. Another collaborative effort with Saint John Water will see the development of a Wastewater and Stormwater Collection system model of the East and Central areas of the City. These models can be used to identify problem areas in these systems and help focus investments where they are most needed. These models will also lessen the burden on developers to assess existing infrastructure capacity when proposing new projects. Council Priorities: Fiscal Responsibility To meet the ongoing challenging budget constraints, Transportation & Environment services staff are heavily involved in various Continuous Improvement initiatives which are expected to find additional efficiencies in service delivery. Next year will see the implementation of these initiatives that will include adjustments to street plowing routes and an improved deployment model for sidewalk plowing. There will be a comprehensive review of mowing routes in the Parks Division and staff will provide support to other continuous improvement initiatives around the use of Fleet assets. The Parking Commission manages both On -Street and Off -Street parking for the City of Saint John. The Saint John Parking Commission continues to be fiscally responsible by making tactical changes which will influence the manner in which parking is administered by: ➢ Amending Traffic and Meter By -Laws and consolidating said changes in one unified document. ➢ Re -visiting the Pay & Display and Coin operated machine replacement program. Recent changes in technology, such as Pay-by-Smartphone technology could revamp the world of parking. ➢ Purchase of a new vehicle mounted Electronic Chalking system to improve the efficiency and accuracy of enforcement. ➢ Participating in the next phase of the Transportation Plan / MoveSJ -14 - Public Safety services Public Safety services support the community in achieving its long-term vision of being a safe, livable and vibrant community where people want to live, work, shop and play. Services are delivered to help improve the safety and well-being of all citizens with a focus on creating safe neighbourhoods that provide opportunities for individuals to develop and grow. The proposed 2017 budget for Public Safety services totals $52,432,256 Mil or 0.69% increase over 2016. Council Priorities: Vibrant, Safe City The Fire and Rescue Service involves the delivery of six public services to the community that focus on reducing loss of life, personal injury, property damage or impact on the environment caused by fire, accident, medical emergency, or hazardous materials release (accident or malicious), and through code enforcement and public education activities. The Fire service is a highly important / regarded customer focused service (IPSOS Reid citizen survey) and serves as a critical component of the "vibrant safe city". To address fiscal challenges associated with rising wage costs, the Fire service focuses on asset management (equipment replacement program) and the development of innovative partnerships which take advantage of the diverse emergency response competence that is required to support the cumulative risk profile of the Saint John Community. The core services of Saint John Police force are Crime reduction, Emergency Response, Law Enforcement, Victim services, and Public order. These services are tightly integrated in order to deliver the most effective public safety outcomes, which are enhanced safety, security and quality of life. The Saint John Police force is known for Intelligence -led policing, community policing and partnerships that result in crime reduction and a safer community. !E:3 -15 - Corporate Services The proposed 2017 Corporate Service budget totals $5,655,442, an increase of 0.4% over 2016. The increase is related to additional funding to ECMA as a result of Council's outstanding commitment to fund East Coast Music Awards. Recognizing the City's governance and reporting responsibilities associated with the Municipalities Act, along with the need to implement Common Council's recently approved priorities for 2016- 2020, the primary function of the Corporate Services group is to establish the City of Saint John as a service -based, results oriented, high performance public service organization accountable to its citizens, taxpayers and Common Council. In an effort to support Council's four priorities (Growth and Prosperity; Vibrant, Safe City, Valued Service Delivery, and Fiscal Responsibility), the Corporate Services Group is focused on a number of strategic initiatives in 2017: ➢ Assess outcomes from the pilot Common Council Committee structure and implement required next steps. ➢ Introduce a new municipal performance dashboard to track key metrics and report organizational performance and effectiveness on a regular basis. ➢ Continued proactive engagement of the City's Agencies, Boards and Commissions (ABCs), with a focus on improving governance, coordination and overall accountability, including the introduction of annual mandate letters. ➢ Introduce new employee performance, disability and attendance management processes. ➢ Explore new service delivery models through innovation, technology and community partnerships. ➢ Fully implement the City's new policy management framework. ➢ Accelerated corporate focus on both the revenue generation and continuous improvement initiatives. ➢ Enhanced community economic development alignment and coordination, with a focus on major projects, creating a competitive business environment and new job creation. ➢ Creation of a renewed municipal communications framework. ➢ Showcasing our City's rich heritage and local arts, culture and recreation experiences as part of the Canada 150 celebrations. !Loll -16- ➢ Enhanced definition of municipal services levels through the annual service - based budget process. ➢ On-going advocacy for equitable taxation, including working with the Cities of New Brunswick Association to promote the benefits of a strong urban growth agenda in New Brunswick. ➢ Maintain positive labour relations with each of the City's employment groups, recognizing the City's financial and long-term sustainability challenges. ➢ By-law modernization and transparent records management (TRM) initiatives. Finance and Administrative Services The proposed 2017 Finance & Administrative Service budget totals $13,700,645, an increase of 1.3% over 2016. The increase is largely due to additional costs associated with an ongoing continuous improvement initiative. Finance and Administrative Service delivery focuses on responsible financial management, sustainable life -cycle management of the City's physical assets, protection of the City's assets and Public interest against damage or liability claims and leveraging technology for process improvement and cost effectiveness. The service area supports various Council priorities. Council Priorities: Growth & Prosperity Information Technology Systems help promote Saint John as a community to live, work and play by providing and supporting services such as the expansion of the City's Open Data portal, maintaining and improving web services for citizens and working with community partners to accelerate the expansion of the City's Public Wi-Fi server. The service now extends to the Cruise Ship terminals, Queens Square, and Prince William Street. Council Priorities: Vibrant, Safe City The Information Technology service supports the implementation of a new Trunk Radio system for Public Safety services. Upon completion, the new system will improve efficiency, reliability and enhance communication capabilities with other jurisdictions in New Brunswick, PEI and Nova Scotia for Police and Fire services. 6119] -17 - Council Priorities: Valued Service Delivery As with many other municipalities across Canada, The City has an aging infrastructure. The requirement to replace or upgrade its assets has far outpaced its ability to fund these assets. In order to provide Council and staff with analytical tools to make informed decisions related to how infrastructure decision-making should be framed, how to derive the best value for Saint John taxpayers, and how to ensure that investments are made at the right time to minimize future repair or replacement costs, Finance & Administrative services, in collaboration with other service areas, have launched an integrated Asset Management Program. Phase 1 of this program, which includes the development of an Asset Management Policy, an Asset Management Strategy, a Corporate Risk Management Framework and an Asset Management Improvement plan, is expected to be completed by February 2017. Phase 2 of the program will focus on determining levels of service, level of service targets and performance metrics, developing a detailed Asset Management Plan and a financing strategy as well as reviewing Asset Management software requirements. It is expected that the Asset Management Plan will be done by the end of 2017 to meet the Gas Tax Agreement requirements. Council Priorities: Fiscally Responsibility Viii°ilii „ With modest tax base growth, increasing debt level and growing i; infrastructure deficit, along -term sustainable financial plan is needed to ensure critical services valued by citizens are sustainable and services are aligned with Council priorities. A Long-term financial plan encompasses long term financial forecasts into the future, including analysis of the financial environment, revenue and expenditure forecasts, debt position and affordability analysis, and strategies for maintaining a healthy financial balance. Capital investment plan and debt management plan are critical components of the long- term financial plan. In 2017, Finance Department will work with other service areas to develop a multi-year budget and a long-term financial plan that aligns with Council priorities, PlanSJ and other corporate plans. To address fiscal challenges and improve services while increasing value to customers, the City has launched a Continuous Improvement program in 2016. Continuous Improvement has become a new culture at the City. Finance and Administrative services have been leading multiple continuous improvement initiatives, such as City Hall space optimization, fleet utilization, Market Square HVAC maintenance, etc. Some of these initiatives will continue into 2017. Finance department has also acted as money belt for all Continuous Improvement projects. 51 -18 - In 2017, Fleet service will implement a new fleet model that promotes efficiencies, transparency and accountability. The new fleet model includes an introduction of a fleet policy, a fleet management information system, adoption of service level agreements with service areas, implementation of a new internal vehicle charge back system and a fleet replacement fund. The fleet model will focus on fleet utilization by creating a new vehicle pool which will be shared among various service areas, thereby reducing the overall number of vehicles, as well as enhancing service quality to internal customers. Conclusion The proposed 2017 General Operating Budget was prepared based on the assumption that property tax revenues and unconditional grant remain unchanged compared to 2016. The budget ensures a stable tax rate ($1.785) for Saint John residents while minimizing service impacts to the community. Resources are allocated based on Council's priorities. Moving forward, the financial challenges will continue. To address these challenges, Staff will focus on revenue generation and continuous improvement initiatives as well as developing an integrated asset management plan and a long-term financial plan that align fiscal capacity with service objectives. SERVICE AND FINANCIAL OUTCOMES Service utnphcattlonzn rchted to en°ouzotnic, so6a� or envinouzmenud utnpa cts hi the community. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Considerable input has been received from all Departments, and the primary Agencies, Boards and Commissions of the City. ATTACHMENTS st attachments rchted to report. 61 Saint Joh!n Barb Crawford, P.Eng, Communfty Chair, Saint John Community Arts Board ........ . . -, November 4, 20116 El 0 A R D City of Saint John Logo based on City Hall 15 Market Square sculpture Progression by PO Box 1971 Claude Roussel, CM, ONS, RCA Saint John, NB E2L it 1. ATTENTION: Mayor Don Darling, Councillor Donna Reardon, and Members of Common Council Re. City of Saint John Community Arts, Board C 0 N S E I L Budget Request, 2017 Fiscal Year DIADMI!NISTRATION Your Worship, Councillor Reardon, and Common Council, de la comm unautd The Saint John Community Arts Board seeks to be a catalyst for arts and culture de Saint JohIn development in the City of Saint John in order to drive population growth and economic growth. This is not an idle dream. Our board of volunteers has a deep, Chairl sident understanding through our work as producers, retailers, consumers and volunteers, of Barb Crawford, P.Eng. Dillon Consuilting Limited' how Saint John's arts and culture sector can deliver to the City a potentially significant return 'on investment, particularly in helping to attract and retain skilled Staphany Peterson - Va Vice workers. Hardman Group Ltd. Carolyn Radcliffe - 2" Vice In order to fulfill our desired role to be a catalyst for arts, and culture development, the Province of New Brunswick Saint John Community Arts Board requests Common Council approve a 2017 budget allotment of $70,000 so we may invest in the following areas, Bernard J. Cormier - Secrawy Cultural Affairs Offioer, City Hall 0 Neighbourhood events and organizations that demonstrate artistic excellence and 'rim Blackmore have a proven track record of building audience support and delivering a Professional Musician measurable impact on local neighbourhoods and/or communities of interest. Joan Brealu 0 Emerging and early stage artists and events that demonstrate artistic excellence Bell Aliant and require an initial investment to test their ideas and identify and build Craig Estabrooks audience. Port Saint John is Experimental artists and events that demonstrate artistic excellence but lack Joanna Everett, Ph.D. Dean of Arts, UNS Saint John commercial viability. Gillian Dykernan The attached document, "Yhe Impact of the Saint John Community,4rts Board: The ArtsLink NB Business CaF,efo'r Increased Funding", outlines the: six major ways arts and culture Won Gao funding supports the City of Saint John's growth plan - and the impact Common Pianist / Court Translator Council's budget choice have on this vital community sector, Dr. Peter Magee If you have any questions or require additional information, please contact me or the Chiropractor City's Cultural Affairs Officer and Community Arts Board Secretary, Bernard Shannon Merrifield Cormier, Buckland Merrfield Gallery David Mudge Yours very truly, Lutz ILongstaff Parish Councillor Donna Reardon City of Saint John Michael Watkins NaVonal P.O. Box I C.P, 1971 Barb Crawford, P.Eng, Saint John, NB / N -B E21- 4LI Chair, Saint John Community Arts Board (506) 649-6040 culturalaffaRrs@saintjohn.ca Encl. 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CL li C c Co 0-8 E E Ld 12 0 CLA C� w ra 0 L ko 'T M Cr u �A = Ln ko Un 0 rIj < CL L" cn 55 4 November 2016 Dear City of Saint John Council, A NEW MUSICAL COMING SUMMER 20W I'm writing to propose a presentation to request your support for a major Musical production taking place next summer at the Saint John Imperial Theatre, The Kernebecasis Valley Players, in collaboration with Ellipsis Productions (Craig Lang), is producing the world -premiere of Alice, a new musical and revisionist adaptation of Alice's Adventures in Wonderland. We are requesting support of $15,000 or the nearest possible value to bring Alice to life. Alice will create a thoughtful, positive impact on our communities as it promotes well-being through music and collaborative teamwork to produce quality performances, It recognizes, explores, and promotes values of equality, inclusivity, diversity, female empowerment, youth engagement, mental health, and family, all through an immensely collaborative community - driven production in the arts. Due to its thematic undercurrents related to mental health, Ellipsis Productions will be donating $1 for every ticket sold to a local mental health support organization. The project aims to: • collaboratively engage the arts community through music, theatre, and dance, as well as set, lighting, and technical design. • inclusively engage the communities surrounding Saint John, New Brunswick, in a new, fun, and exciting experience that demonstrates the talents of our community and our ability to create professional results of the highest calibre, as a team. • educate and generate discussion in southern New Brunswick schools about mental health and well-being through the arts. ® extend the reach and impact of The Kennebecasis Valley Players theatre group across multiple communities to reach a population 5x its current audience and participant base. • provide, for the first time, necessary resources to the KV Players to polish their professional results an a higher production scale with fewer budgetary limitations. • provide professional development for all cast and crew. • support the Saint John Imperial Theatre • encourage dialogue surrounding mental health and generate funds to support mental health I have attached our production budget for your review and I look forward to providing details on this project on Tuesday evening. Sincerely, Craig Lang Ellipsis Productions so 6073 Coburg Road, Suite 3 . ...... Halifax, Nova Scotia j 33H IZI p produc Alice - A New Musical 15 56 (506) 721-9594 mfo@elli s�[srod�ucfi n�sca www.elIipsisQrodUCtiOnS.ca Page I of I A NEW MUSICAL COMING SUMMER 2017 Dear City of Saint John Council, Please find attached an outline of the budget expenditures for the premiere of Alice at the Imperial Theatre in August 2017, The success of this new musical in our home territory is reliant on community engagement. Through community support for production costs we aim to keep tickets reasonably priced to help enable access to all. A major intent of this show is to set up the KV Players for future continued success, further growth, broader reach, and to build upon their abilities In order to create a fully polished, professional production. There is added cost associated with taking their productions to the next level that come with many benefits. This production budget effectively triples the regular budget of the KV Players for their major productions. A large portion of the added cost is to rent the Imperial Theatre venue. We believe this is of significant value, however, in order to engage all of the greater Saint John communities in this project, which will in turn grow the audience and participant bases of the KV Players. It provides a professional stage for the production, greatly Increases seating capacity, and provides a central venue that will be attended by more of the population of greater Saint John and beyond (-127,000+) versus solely the population of the Kernebecasis Valley (-27,000) from which almost the entire KV Players audience is currently represented. In consultation with KV Players we have also established ideal production figures that will allow them to design costumes, sets, and tech to their full' potential. Necessary equipment rentals such as wireless microphones for the cast are also included, as well as the costs to hire professional musicians for the live orchestra. Much of this project is on a volunteer basis, however, fair honorariums are included for lead designers and their assistants, for their time. To ensure success of a production of this scale, significant advertising is a necessity. Since this is a new production, multi -angle marketing visibility will play a vital role in selling out shows, getting it exposed in advance to the eyes and ears of our target audiences. Ellipsis Productions will be advertising through websites and social media, school workshops, posters, print ads, and radio. We have partnered with Acadia Broadcasting (97.3 The Wave, CHSJ Country 94.1) on an 8 -month advertising campaign to promote the event from casting to premiere to the communities of Southern Now Brunswick, Acadia Broadcasting is providing approximately $50,000 in services at a cost of $10,000. Alice - A New Musical 16 57 Page 1 of 2 in support of mental health, $1 from every ticket sold will go to a local mental health support organization in the respective community anywhere Alice is produced. For the premiere we have chosen the KV Oasis, a new organization that targets support for youth, and we have the potential to sell upwards of 4260 tickets, for this production. We are in the midst of partnering with Apple Canada to match this and all future donations. We are working hard to partner with local businesses for in-kind services, such as print, tech rentals,, and advertising, in return for sponsorship opportunities to help bring this musical to life and to keep ticket prices low. The KV Players has always aimed to maintain accessible ticket prices and for this production we expect them to be in the range of $20 to $30, dependent on the funding we receive. We are aiming to cover 50% of our costs through municipal/provincial grants and local sponsorships with the remaining 50% covered by in-kind services and ticket sales. If our funding goals are reached and any additional funds become available we am to produce a short documentary on the project with Hemmings House Pictures to promote all of our communities, the KV Players, and the musical itself. This premiere production is not for profit and we are only seeking to cover our costs. In the event of any revenue generated above and beyond those costs, they will go towards marketing the musical beyond our region to encourage other communities to build their own version of the experience we've created, while helping raise mental health awareness and to give back to local support organizations. Please feel welcome to contact me at any time if there are any questions, Thank you! Sincerely, Ellipsis Productions 6073 Coburg Road, Suite 3 Haiifax, Nova Scotia 33H 1ZI Alice - A New Musical 0 0 41 P S Is (506) 72croductiors.ca Ee_ 1 1-9594 infagelliosis productions www. el I i psi s prod u ctions. ca 17 58 Page 2 of 2 zo a a — a a — •0 E� a a a 0 0 < o cr o 0 0 0 E Z5 0 - CD 0 cr • o q o o Q Ci x. M U) 0 — M 0 0 0 o o • 'LS 4y '0 • 0 CD CD 0 Q 0 0 CY) 0 0 co C CD E CC - 0 CL m m It LO (.0 LO W t5 0 �.q G9 4.% i-% £o V> <6 f;q Eq fia (0 U) a a rwr- cz a _0 c c 0 0 0 0 < cr V) E 0 0 E Z5 0 - CD 0 cr CL n Lu C� C? Ci x. M U) 0 — M 0 EZ (D LO 'LS 4y '0 O'v f.q (a 0 0 0 U) a a rwr- cz a _0 c c 0 0 0 0 < cr V) E 0 0 E Z5 0 - CD 0 cr CL n Lu C� C? Ci x. M LO 0 — M 0 EZ (D LO 'LS 4y '0 O'v f.q (a 0 0 CL (JI to CIi CQS ui 0- 0 < U) c 0 - CL ,2 0 D E0 0 _0 - 0 0- -0 U) 0 0 0 C: > 0 -F- CL (n 8 0 U- 0 :3 -0 c 0 U) CL E c 0 C} a a a a _0 c c 0 0 0 0 CU o 0 0 0 0 CD m Ili q C� C� C? Ci N LO 0 — M 0 LO co '0 69, f.q (a oa 0 < 0 co C CD E CC - 0 CL C: m m 0 0 < CU > co < 70 0 co '0 co 0 < 0 co C CD E CC - CL C: W t5 0 co CL tV 0 m m 0 0 < m FINANCE COMMITTEE REPORT Report Date November 16, 2016 Meeting Date November 17, 2016 Chairman Councillor Merrithew and Members of Finance Committee SUBJECT: 2017 General Fund Capital Budget OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. HeadL4 City Manager Craig Lavigne Kevin Fudge m I Jeff Trail RECOMMENDATION It is recommended that the Finance Committee approve the 2017 General Fund Capital Budget and be recommended for approval at the November 28 Council meeting. EXECUTIVE SUMMARY The draft 2017 General Fund Capital Budget was presented to the Finance Committee on October 6. The information has been updated to reflect Council's priorities approved on October 31, 2016. The purpose of the report is to provide the Finance Committee with the City of Saint John proposed 2017 General Fund Capital Budget for submission to Common Council. PREVIOUS RESOLUTION N/A STRATEGIC ALIGNMENT The proposed 2017 General Fund Capital Budget is aligned with Councils' priorities, Plan SJ and Play J, focusing on investment in the prime development areas. REPORT Aii] -2 - The 2017 General Fund Capital Budget aligns with Council's priorities to support investment in Growth and Prosperity, creating a Vibrant, Safe City, offering Valued Service Delivery and being Fiscally Responsible. The budget also strategically aligns with Plan SJ and Play SJ. Several of the capital projects in the proposed budget span across several of Council's priorities. For example, investing into road improvements not only supports value service delivery, but also demonstrates fiscal responsibility by preventing roads from falling into a more costly reconstruct stage. Investment in facilities such as the Aquatic Center and the Carleton Community Centre reduces the infrastructure deficit while at the same time invests in recreation experiences that create a sense of community pride. The City is undertaking an asset management plan will play an important part of future capital budget decision making. The plan will give Council the ability to make evidenced and strategic based decisions on where best to invest the limited capital dollars to help achieve Council's priorities. The asset management plan sets the foundation for long term debt planning, long term financial planning and supports fiscally responsible spending focused on service. The Finance Department received $53.66 million in capital budget requests from service areas in 2017. The requests exceed the $10-$12 million that the City has established as a financial measure to keep long term debt from growing to an unsustainable level. Long term debt for the General Fund will reach $117.1 million by the end of 2016. The proposed 2017 General Fund Capital Budget totals $22,214,250 of which $12,037,750 is to be funded from other sources (gas tax, reserves, etc.) and the remainder $10,176,500 is to be funded by debt issue ($11,926,300 in 2016). 2017 CAPITAL BUDGET HIGHLIGHTS Council Priority - Valued Service Delivery The capital budget includes investments that support sustainable city services and municipal infrastructure. Key investments include road improvements, investments in municipal buildings, storm water, fleet and information technology that will maintain service delivery and contribute to reducing the infrastructure deficit. Transportation — Council's priority to ensure valued service delivery calls for continued investment in road improvements including asphalt, curb and sidewalks, as well as surface reinstatements associated with water and sewer projects. The 2017 General Fund Capital Budget includes $5.345 million of investment in asphalt, curb and sidewalk and street reconstruction. This represents a year over year reduction of $600,000 compared to the 2016 AI -3 - General Fund Capital Budget ($5.95 million). The reduction can be attributed to less road reconstruction tied into the Water and Sewerage Capital Budget. Total investment in roads in Capital and Operating Budgets for 2017 equals $6.71 million ($7.29 million 2016). Overall PCI is intended to remain at similar levels; however there is risk that the price of asphalt and the reduction in capital spending may have a negative impact if the trend continues. Additional funding for Transportation Services includes replacing the bus lay area on King Street ($100,000), and funding for Sand Cove Road ($700,000). Staff will report back to Council on Sand Cove Road. There is also funding included for the repairs at the Howe's Lake landfill ($100,000) to replace the landfill cover to ensure there are no negative environmental impacts. Drainage — Continuing to invest in Westgate Park, funds have been included in the amount of $880,000. There are also three projects included for storm sewer separation that is being done in conjunction with Saint John Water for $375,250 which will continue to advance the reliability of the wastewater network through separation of storm water and wastewater as well as amount for land acquisitions of $50,000. Fleet — Funding of $2.5 million from the fleet reserve is included to ensure the City has the equipment and fleet required to provide necessary public services without having to increase borrowing. A new fleet model is being developed for 2017, along with a reduction of vehicles through the continuous improvement initiatives that aligns strongly with a value service delivery model. A separate report to Council will be coming in before the end of the year. Information Technology - The City's information technology is key in supporting Council and staff initiatives, as well as supporting effective and efficient delivery of the services provided to residents. The proposed budget includes $780,000 in IT investments, with $730,000 being funded from the computer reserve fund. This is made up of network infrastructure and upgrades to the ERP ($150,000), disk storage and backup systems ($200,000) and the regular replacement of monitors, laptops, workstations and licensing agreements ($380,000). There is also funding included to upgrade the Council Chamber electronic equipment ($50,000). Parking - Investment in an electronic chalking machine and purchasing additional pay and display machines ($152,000) will increase efficiency and replace aging coin machines. The chalking machine will require less manual work around monitoring parking and the pay and display machines will reduce the manual work of collecting and counting multiple meter devices. Energy Management - The City of Saint John is a finalist for a Quest — Smart Energy Community Award and has received other awards such as the Premier's Award for Energy Efficiency through the work done around energy management. I' -4 - The 2017 budget has funding included for $22,000 for various energy efficiency projects. Council Priorities - Vibrant, Safe City & Growth and Prosperity The 2017 proposed budget continues to see investment in key assets that support services such as Transit, Recreation, Parks, and Public Safety that promote neighborhoods and creates a vibrant and safe City. Recreation— Strategic investment in recreation, culture and arts creates a sense of community pride. Investments in facility renewal in areas such as: the Rockwood Park Interpretation Center, the Dominion Park canteen, and Queen Square lighting ($200,000) has been identified. The budget continues with investments in facilities that include replacement of additional windows and HVAC upgrades at the Carleton Community Center ($470,000), safety rail replacement at LBR ($150,000), second air handling unit and equipment at the Canada Games Aquatic Centre ($610,000), and equipment and energy upgrades at Harbour Station ($170,000). Harbour Passage — Building on Play SJ and the Bike and Trailways Master Plan, staff has identified an extension of Harbour Passage to Sydney Street as a strategic priority. This extension would increase the accessibility of Rainbow Park, as well as Tin Can beach. Half of the cost of the project would be covered through the Public Infrastructure Fund ($600,000). City Market — The market is an historic icon for the City and was nominated as one of Canada's Great Public Spaces of 2013. Funding was officially committed from the Province and ACOA for $2.03 million each in 2016. This investment celebrates and protects the history around the historic City Market. The capital budget recommends $360,000 for the City's portion which will bring the City's total funding to $2.03 million since 2014, matching the other levels of government. Central Library — The Central library celebrates arts and culture. The Library hosts author readings, live music and is a community gathering place. Renovations to the central library include renovations to the children's department, teen space, creating a flexible space for authors and musicians and flooring replacement ($80,000). Fort Latour — Building upon Harbour Passage, $220,000 has been earmarked for the City's funding for the Fort Latour Project. Fort Latour celebrates the history of Saint John and this project will improve this green space on Harbour Passage for the enjoyment of citizens and visitors. Saint John Stone Symposium - The Saint John Stone Symposium attracts international artists to the Saint John Waterfront. The capital budget includes W -5- $15,000 to cover the deposit of two stone sculptures for the 2018 Stone Symposium. These two works of art will be placed at two locations within the City. Transit — Access to reliable cost-effective public transportation plays an important part in creating great neighborhoods. Saint John Transit has secured funding from the Public Transit Infrastructure Fund (PTIF) in 2016. Funding of $2.5 million (half from PTIF) is included in 2017 capital budget for the purchase of 5 bus replacements and an approximate additional $3.1 million (half from PTIF) has been committed for 2018 for additional buses. This investment in buses will ensure reliable transportation and reduce the average age of the transit fleet of buses there by reducing operating expenses. Public Safety Services — A major investment for Public Safety was approved in the 2016 capital budget to replace the trunk radio system currently being used by the City's first responders. The second allocation of $1.25 million is provisioned in the 2017 capital budget. Upon completion of the project, Police, Fire and EMO will have the capabilities and efficiency around communications needed to perform the changes with an evolving community. This project will also provide more communication capabilities with other jurisdictions in New Brunswick, PEI and Nova Scotia that is not currently available today with the 30 year old technology being used. Fire — To ensure the Fire Department has the equipment to provide safe and effective delivery of service, equipment needs to be reliable and safe. The budget has $110,000 for replacement of safety equipment and $20,000 to replace the emergency generator at Fire Station #1. Police — The Police require replacement of their firearms that have been in use since the early 90's and are no longer supported by the manufacture ($200,000). Economic Development — The Trade & Convention Centre's year 5 of the 5 year commitment made by the City to upgrade the facility is included for $125,000 which will bring the total investment to $1.581 million since 2013. Fundy Quay — Drilling on the Fundy Quay site has been completed and an additional amount of $70,000 is needed to complete the environmental assessment on this site. Council Priority - Fiscal Responsibility The 2017 capital budget aligns with Council Priority of fiscal responsibility. The capital budget set forth is based on $10,176,500 of new borrowing; however there are significant contingent projects that could put upward pressures on long term debt if one of those projects moves forward. Staff continues to A*I -6 - recommend that Council limit new debt to $11-$12 million per year in order to reduce the debt over time to ensure fiscal sustainability. Staff is currently preparing applications for funding under the New Building Canada Fund (Small Communities Fund). Applications for funding are due by November 15 and several projects recommended in the capital budget are being submitted for funding. If the City is successful in receiving additional funding for these projects, Council will have the opportunity to reduce borrowing or put additional money into other projects. With Council's endorsement, staff has undertaken the first steps in developing an Asset Management plan. A request for proposal has been issued and will be awarded to the successful proponent. The first phase of the plan is targeted to be completed by end of 2016 and second phase by end of 2017. This will set the foundation for current and future Councils, staff and all stakeholders enabling better sound financial decisions, setting levels of service and the creation of long term financial plans. This will be a living document to help guide financial decision making. Contingent Funding Envelope A contingent envelope of potential capital projects is also included with the 2017 General Fund Capital Budget. Several of these projects have been listed in previous capital budgets and are contingent on achieving additional funding. Fundy Quay — The contingent budget for 2017 includes $2.1 million (50% of the total cost) for refurbishment of the sea wall and $2.0 million for environmental remediation (approximately 1/3 of total cost). The business case for this investment will be tax base growth in the PDA and the costs of borrowing will be weighed against the return on investment. Exhibition Field House - This $25 million project involves the construction of a new Field House at Exhibition Park. The Centre would include an indoor track and facilities for a range of indoor sport activities. The City has been requested to consider a contribution of $4.2 million over a three year period. The City funding is contingent on securing federal and provincial funding commitments as well as ensuring the City has no exposure to risk of having to fund any future operating deficits. Loyalist Plaza — The estimated cost of the Loyalist Plaza Development is $6.4 million with an anticipated City contribution of $3.4 million. A master plan has been developed, after a series of public consultations, that when implemented will serve to rejuvenate this anchor location in the Uptown. The City's commitment is contingent on the remainder of the capital funding being secured. ARI CONCLUSION Planned capital expenditures total $22,214,250 with $12,037,750 coming from other sources. The annual funding from the gas tax program as well as funding from other government programs, has helped reduce projected borrowing costs and has allowed the City to undertake needed infrastructure improvements. This level of capital expenditures is within the City's borrowing capacity. The 2017 capital budget invests in road infrastructure, storm and environmental needs, public transportation, public safety, arts, cultural, and recreation while maintaining fiscal responsibility. The projects identified align with Council's priorities, Plan SJ and Play SJ. SERVICE AND FINANCIAL OUTCOMES The 2017 General Fund Capital budget will become a fixed charge for the next 15 years for the General Operating Budget. The projects chosen for the capital program that require borrowing have a useful life of 15 years or more. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Input has been received from the all the Service Areas, the ABCs and the Senior Leadership Team and Common Council. 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